ORAL ANSWERS TO QUESTIONS

TREASURY

The Chancellor of the Exchequer was asked—

Credit Unions

Sharon Hodgson: What steps he is taking to assist credit unions during the economic downturn.

Ian Pearson: The Government strongly support credit unions and have announced in the Budget an extra £18.75 million for the growth fund, bringing the total to almost £100 million. The extra funding will allow further assistance through accessible, affordable loans to be made by credit unions and community development financial institutions in addition to the 160,000 loans made so far.

Sharon Hodgson: The Minister will be aware that I have written to him about my local credit union, Wearside First, which helps thousands of people across Sunderland to save and to access affordable loans. Those people would otherwise, unfortunately, have to use illegal loan sharks, and we all know the road that that would take them down. However, that wonderful credit union is facing closure due to a lack of funding. Will the Minister agree to meet me and representatives of Wearside First to discuss the situation?

Ian Pearson: As my hon. Friend knows, Wearside First is one of the credit unions that is participating in the growth fund, and it has been doing good work. I would be very happy to meet her and a delegation from the credit union to discuss the issues that it faces. Obviously, she will also want to discuss the matter with her local authority—perhaps she has done so already—but I would be very happy to have a conversation with her about this issue.

Mark Pritchard: If the Government are serious about helping the poor, why are Ministers allowing some credit unions to charge up to 27 per cent. interest? That is far higher than the rate charged by many leading retail banks. Given the large taxpayer subsidy to which the Minister has just referred, are the Government not complicit in making the poorest in our society suffer?

Ian Pearson: No; I do not accept that. The Government strongly support the credit union movement across Great Britain. There are 532 credit unions, which have two thirds of a million members and somewhere in the region of £500 million-worth of assets. I would have thought that the hon. Gentleman would welcome the extra resources that the Budget has provided to make additional loans available to vulnerable people at very affordable prices. By 2011, an additional 85,000 people will be able to be helped as a result of the actions announced in the Budget last week. That is good news for people who need affordable credit; the credit unions play a tremendously important role in keeping such people away from doorstep lenders and loan sharks. Credit unions should be supported, and that is what the Government are doing.

James Plaskitt: The extra financial help from the growth fund is extremely welcome and will be of great assistance to many credit unions, but they sometimes need help that does not have a price tag. In some instances, they simply need a place in which to deliver their services in the community. Through the ministerial work that my hon. Friend does with other Departments, will he look into the possibility of using Government buildings such as Jobcentre Plus and Sure Start centres to give credit unions more places where they can deliver their services in the communities in which those services are now greatly needed?

Ian Pearson: My hon. Friend makes a good point. The Government are very interested in examining how we can extend the coverage of credit unions throughout Great Britain—they are already very strong in Northern Ireland, as he is well aware—and considering whether certain premises could be made available. We are also looking into other routes that would ensure the necessary coverage of credit unions in all the most vulnerable neighbourhoods across Great Britain. We will indeed look at the inter-ministerial level at what more can be done.

Greg Mulholland: My constituent, Tony Massarella from Otley, is an accountant to many credit unions, and is something of an expert on their structure. Along with many credit unions, he is concerned that the Government's approach favours the very large credit unions, when surely the point is to keep them close to the very communities that the Minister says they should serve. Will the Minister assure me and Mr. Massarella that the Government do not believe in a "biggest is best" approach to credit unions?

Ian Pearson: As a Government, we want to see a range of credit unions and, in recent years, we have worked very closely with the credit union movement. The hon. Gentleman will probably be aware of the legislative reform order that we have consulted on, which we hope to launch before the summer. He might also be aware of the Co-operative and Community Benefit Societies and Credit Unions Bill introduced by my right hon. Friend the Member for Croydon, North (Malcolm Wicks), which we discussed in Parliament last Friday. It provides for further changes to support the modernisation of the credit union movement. However, that should not be taken to mean that we want to see overwhelmingly big credit unions. We want to see a range of credit unions performing a range of functions that will benefit people in local communities and local organisations.

Jim Devine: I know that my hon. Friend will want to join me in congratulating the Livingston credit union, which is opening a new office in Livingston on Friday. Does he share my concern, however, that the Scottish National party Government have abolished the £3.5 million ring-fenced funding that was set up to establish and develop credit unions in Scotland?

Ian Pearson: I certainly welcome the opening of Livingston credit union's new office. Credit unions are as important in Scotland as they are in the rest of the United Kingdom. Obviously it is a matter for the Scottish Administration where they put their resources, but I would like to think that they would want to support the credit union movement, just as we have done through last week's Budget.

Government Infrastructure Investment

Norman Baker: Pursuant to the written ministerial statement of 3 March 2009,  Official Report, columns 47-8WS, on Government infrastructure investment, what assessment he has made of the implications of Government policy for the private finance initiative funding provided for the extension to the waste contract let by East Sussex county council and Brighton and Hove council.

Angela Eagle: There are no such implications. The announcement made on 3 March is targeted at PFI projects that have not yet reached financial close. This particular project reached financial close in 2003.

Norman Baker: I thank the Minister for that, but is she aware that the European Commission has indicated that it is minded to uphold my complaint against East Sussex county council for failing to follow public procurement rules in respect of a contract extension that has recently been undertaken, for which PFI funds have been made available? Can she assure the House that East Sussex county council sought specific approval from the Treasury before entering into the contract extension in order to confirm that the terms of the original PFI award were not breached and that all obligations in respect of public procurement have been properly discharged?

Angela Eagle: My understanding is that, as the extension required no further PFI credits or further money from Her Majesty's Treasury, those decisions were a matter for the local authorities concerned.

Kelvin Hopkins: rose—

Mr. Speaker: I am usually happy to call the hon. Gentleman, but Brighton and Hove is a good train journey to the south of Luton, is it not?

Lending to Business

Nick Palmer: What recent assessment he has made of the trends in lending by UK banks to businesses.

Alistair Darling: The Bank of England published a new report on lending just last week. It suggests that some lenders expect the overall availability of credit to the corporate sector to improve over the coming months.

Nick Palmer: We also have the impression locally that the position is improving somewhat, but does the Chancellor agree that public support for the rescue of the banks is very much conditional on the banks' willingness to support the rest of the economy? Will he be doing all he can to ensure that our colleagues in the newly nationalised banks are aware of that public feeling?

Alistair Darling: I agree with my hon. Friend; the reason why we decided to intervene to restructure and rebuild the banking sector was the need to ensure that credit keeps flowing—that is vital for business. RBS will lend an additional £25 billion this year and next, the Lloyds group an additional £14 billion this year and next, and the figure for Northern Rock will be about £5 billion, which mainly relates to mortgages. Even the banks in which we do not have a stake have benefited from the support that we have given: HSBC has said that it will lend another £15 billion, while Barclays will lend another £11 billion this year. That money will be made available—although obviously it is important that we do everything that we can to ensure that credit keeps flowing—and will complement the measures that I announced in the Budget last week that are specifically designed to help businesses.

Vincent Cable: Why is the Chancellor proposing to sell the good parts of Northern Rock this year when under current market conditions that would almost certainly guarantee a very large loss, rather than wait for market conditions to improve and get better value for money for the taxpayer?

Alistair Darling: I assume that the hon. Gentleman is referring to the reports that I have seen in the newspapers over the past few days. I have always been clear that my objective, once we get through this, is to return those banks to the private sector, because I do not believe that the Government ought to be in the business of running banks in the long term—I think that he agrees with that view. The question is when we should sell those banks back to the private sector. The answer will be determined by what represents the best value for money for the taxpayer, so I am in no hurry to do so. It is far better that we ensure that when we sell we are satisfied that what we are getting represents the best possible deal. I can tell the hon. Gentleman that it is not something that I would rush into; I want to ensure that we get a good price for the assets that we have.

Dari Taylor: The chemical process industry in my constituency makes the point that although excellent investment is available for research, very little investment is available for projects that are being made ready for market. What are the Government doing about that?

Alistair Darling: I agree with my hon. Friend that it is important that we support research. She will know that through the research and development tax credits we have done a great deal in this country, particularly in those areas that are very dependent on research. She is also right to say that we need to ensure that, having got the research worked up, we can then convert it into something that is ready to go into the market. That is why, for example, we have put more money into the Technology Strategy Board, which helps to develop such products. We have also made sure that there is a range of measures available to help with funding. My hon. Friend is right to identify the problem, which is shared by many countries. It is right to try to address it in every possible way, because we are very good at inventing and innovating in this country. The key is to convert that into products that can be sold in the marketplace.

Peter Tapsell: Does the Chancellor agree that the objective of the announced programme of quantitative easing is to increase and facilitate lending by banks to businesses? The Bank of England has warned against another fiscal stimulus, so why is it proceeding with QE in such a half-hearted manner that it has actually raised the yields on gilts? It was also very slow to lower interest rates on the eve of the crisis. Would not Montagu Norman be proud of them?

Alistair Darling: I will leave that discussion for another day. The Bank of England has authority to put money into the economy to kick-start credit, and it has agreed to spend £75 billion. Part of that will involve buying commercial paper to help ease lending conditions between companies, but it takes time to build up that activity. The Bank has operational independence for doing that; although, obviously, I had to authorise the operations in the first place, the Bank decides when and where to intervene. I know that the Governor is very aware of the fact that, as part of the process of putting money into the economy and getting credit going, he must ensure that he helps the commercial sector. I know that he is looking at various measures to help him to do that, and he set all that out when he last appeared before the Treasury Committee.

Ken Purchase: Does my right hon. Friend agree that the flow of bank lending to smaller companies would be considerably improved if banks would stop imposing impossible conditions? I refer specifically to those banks that want personal guarantees from owners and directors who are applying under loan guarantee schemes that will be met in default by Government. Is it not wrong that when the Government are doing all that they can to improve the flow of money to small businesses, banks are impeding that flow by making the loans conditional on personal guarantees?

Alistair Darling: My hon. Friend is right: the Government are doing a great deal to help to increase the amount of money available to small businesses, and over the past few months some 2,000 businesses have been offered some £240 million of additional lending. Other measures are in place. Banks need to be reasonable with their customers and balance the need to ensure that they do not repeat the mistakes made over the past few years—when credit was given with too few questions asked and not enough security—with avoiding the situation in which conditions are so restrictive that the schemes do not actually work. A degree of common sense is required. It is important that we do everything that we can to get credit going, because it is an essential precondition to recovery, and that is why we decided to intervene to support the banking sector.

Stewart Hosie: Although the base rate is only 0.5 per cent., the real cost of borrowing for business is much higher. The banks put that down to a combination of the LIBOR rate, the requirement to strengthen balance sheets and, to some extent, the cost of the various Government insurance guarantee and asset protection schemes. Given that the cost of the latter is within the Government's control, is the Chancellor prepared to look again at the pricing policy for the insurance guarantee and protection schemes to determine whether a change might bring down the cost of money to the banks and therefore lower the cost of borrowing for business?

Alistair Darling: The hon. Gentleman raises an important point. The Government have put in place substantial schemes to deal with the problems of assets for which there is no market, or where prices have fallen, that were restricting the ability of the banks to lend. The Government have also made available funds through the special liquidity scheme and other measures. However, we have to make a charge for doing that, and we must also ensure that there is some discount, so that it is not just seen as a free good. The obvious other side is the need to ensure value for the taxpayer.
	I think that one reason why the IMF withdrew its initial calculations when it tried to calculate our potential liabilities was that it had not quite realised that we had made provision against debts or provisions that might go bad. I have always made it clear that there is a fee to be charged and a price to be paid, because the banks cannot expect to receive this as a free good. Obviously, I will keep all these things under review, because my primary objective is to ensure that we get credit flowing through the economy again, and the banking system is essential to that. I appreciate the hon. Gentleman's general point about what businesses pay. We will do everything we can to try to keep that price as low as possible, but I have to have regard to the general security of the taxpayer's position.

Sally Keeble: I welcome the progress made on new lending, but is my right hon. Friend aware that some banks, including those of the Lloyds group in my constituency, are taking a punitive approach towards some existing loans? That has included telling one local business that it should mothball a housing development. Will my right hon. Friend say how the Treasury will use its leverage with the banks with which it has holdings to ensure that they do not take such a punitive approach towards existing borrowers and that they continue with the loan arrangements that have already been made?

Alistair Darling: As I think that I have said on a number of occasions, we cannot second-guess the judgment of every bank manager on every customer. However, we say to the banks that we have made substantial support available and that we want to see that support translated into support for businesses. I would be very happy to look at the case that my hon. Friend raises—obviously, I have no knowledge of it, so I cannot possibly comment on it. It is important, as I said to my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) earlier, that we should ensure that there are funds available but that there has to be a degree of judgment in each individual case about whether the loan is a good prospect and about whether it can be repaid. We do not want to get into the very problems that brought about this situation in the first place, where loans were given without enough questions being asked and with disastrous consequences for the banks and for the wider economy here and across the world.

Mark Hoban: The Chancellor is being complacent about the flow of credit into the economy. The enterprise finance guarantee scheme is under fire from businesses up and down the country. The working capital scheme started a month late, with only RBS signed up to it. In the Budget, after months of pressure, the Chancellor finally announced the trade credit insurance top-up scheme. Did the British Retail Consortium not sum up the Government's attempt to get credit flowing again when it said that the trade credit insurance scheme was "too little too late"? While the Government have dithered, the help that they have offered has come too late for many businesses and their employees.

Alistair Darling: I would say that the support that we have made available to the banking system is fully justified. It was necessary—as I said, it is a necessary precondition of recovery. We have also put in place a number of measures: the hon. Gentleman mentioned the enterprise finance guarantee scheme, which is helping 2,000 businesses. We now have support for exporters and other measures of support, too.
	I hope that when the hon. Gentleman spoke to the BRC he pointed out what would have happened had he had his way, as he was against every single one of the measures. I am always interested to hear his concern about what we are doing, but he ought at least to stand up and say, "By the way, I would not have done any of these things", as his Leader of the Opposition made clear at the weekend.

Government Shareholdings

Peter Viggers: How much financial obligation the Government have undertaken as a consequence of taking shareholdings in banks and building societies.

Stephen Timms: The Government have to date invested £37 billion in Lloyds and RBS. The Budget estimated that the one-off long-run fiscal impact of all the interventions to ensure stability in the financial system will be between 1.5 and 3.5 per cent. of gross domestic product.

Peter Viggers: If the Prime Minister can express anger that the Royal Bank of Scotland should make an acquisition without fully understanding the extent of the commitments that it was taking on, how much more angry should we be that the Government have taken on commitments and made investments in banks without knowing, even now, the full extent on the taxpayer's behalf?

Stephen Timms: I am not quite sure what the hon. Gentleman is saying. The implication is that we should not have stepped in to save the financial system from collapse because of the uncertainty to which he refers. The cost of doing nothing would have been far, far greater. We took decisive action. We acted quickly and we saved the system from collapse; indeed, in the debate yesterday, the shadow Business Secretary recognised that those steps were right.

David Kidney: One of the many damaging aspects of the greed and recklessness of the bankers is that markets do not know the extent of the losses that they made in deals. In cases where the British taxpayer now has a stake in banks, are we getting to the bottom of those losses so that we can start to restore confidence in markets?

Stephen Timms: Yes, we are. A great deal of detailed work is going on at the moment to negotiate the specific terms for participation in the asset protection scheme. My hon. Friend is right; in particular, the future valuation of assets is very difficult, but I know that he will agree that the cost of not acting would have been far greater than what we have done.

John Redwood: Is there any limit to the amount of financial risk and debt that the Government should assume? Can the right hon. Gentleman tell us if they are using any prudential rule at all to stop us heading towards national bankruptcy?

Stephen Timms: The right hon. Gentleman will have seen what my right hon. Friend the Chancellor said in the Budget about returning the public finances to balance by 2017. He will also have seen the estimate I have mentioned already that the overall cost of all the interventions we have set out in the Budget will be between 1.5 and 3.5 per cent. of gross domestic product. It was absolutely vital that we took those measures.

David Taylor: A moment or two ago, our right hon. Friend the Chancellor confirmed the Government's intent to return state-owned banks to the private sector as soon as it was expedient so to do. Does my right hon. Friend the Minister agree that the problems of organisations such as Northern Rock and Bradford & Bingley started with demutualisation back in the '80s, and would it not be a good idea, rather than just floating those two organisations back into the private sector without wider consideration, to consider remutualisation of at least part of their business, as at the moment that model has greater attraction and confidence among the wider community than does traditional banking?

Stephen Timms: That must be a matter for the management and shareholders of those organisations.  [ Interruption. ] I would say to my hon. Friend that we certainly need to learn lessons in regulation from what went wrong in the past, and Lord Turner's report has been valuable in that regard. We need to make some changes, and we need to agree them internationally, to avoid repeats of those mistakes. In particular, we need to avoid the calls of those who, over many years, wanted minimal regulation of the financial sector.

Mark Field: Although I appreciate that the Treasury is reluctant to commit to any timetable about divesting its interest in the banks, how will we all know when the financial system has been fixed?

Stephen Timms: What we are looking for is a restoration of the flow of credit, in particular to mortgage borrowers and to businesses. We are some way from that position yet, but as my right hon. Friend the Chancellor mentioned, the Bank of England is now publishing a monthly report on trends in lending. We shall be scrutinising those reports carefully, as I am sure will the hon. Gentleman. We want to see the flow of credit go back to normal.

Fiscal Framework

John Howell: What his plans are for the future of the Government's fiscal rules.

Yvette Cooper: The pre-Budget report set out the Government's approach to the fiscal framework as a result of the recession and the global credit crunch. That approach has continued as part of the Budget.

John Howell: Given that the Government's fiscal framework has been shown to be pure fantasy, why should we have confidence in any fiscal framework that the right hon. Lady wants to put in place for the future? Will she adopt our policy for an office of Budget responsibility?

Yvette Cooper: If that is the hon. Gentleman's only proposal—to create a quango—I do not think that it will create a proper approach to the fiscal framework. We all know that the global credit crunch and the worldwide recession are affecting the public finances, and they are affecting revenues from the City and from other sectors, too, but the right thing to do is to support the economy through the downturn, to invest so that we can bring borrowing back down because the economy is growing, which will obviously save us more in the long run.

Mr. Speaker: I call Kelvin Hopkins.

Hon. Members: This time!

Kelvin Hopkins: My right hon. Friend has wisely relaxed the rule on public borrowing— [ Interruption. ] Necessarily so. Would it not now be sensible to abandon entirely any future private finance initiatives, given that they were apparently justified on the basis of restraining public borrowing? Would that not be a sensible time to start to bring PFI services back in-house and to look at ways to bring all PFI schemes back into the public sector, which would save billions of pounds for the public purse over the next 30 years?

Yvette Cooper: The PFI schemes that were introduced have improved timeliness and cost-effectiveness in many cases. There is still interest in putting private sector equity into such projects, but there are difficulties with private sector debt due to the condition of the credit markets. That is why we are providing additional support to ensure that the PFI projects that are close to closure can go ahead.

Richard Spring: How many times have the time spans of the so-called golden rule and the sustainable involvement rule changed in the past 10 years?

Yvette Cooper: We made it clear as part of the pre-Budget report that we are not following the previous fiscal rules at the moment. It would not be appropriate to do so now because, for the first time since the second world war, the entire world's economy is shrinking, which we did not expect even 12 months ago. That is having an impact on the public finances, which is why all countries throughout the world are increasing support for their economies. No country would support such a tight approach or cutting public spending during a recession, as the hon. Gentleman's party advocates.

Government Borrowing

Andrew Selous: What assessment he has made of the level of UK Government borrowing compared with those in other OECD economies.

Alistair Darling: I set out my forecast last week.

Andrew Selous: Is it because the IMF thinks that Britain's deficit next year will be worse than Japan's and America's that one of the Chancellor's senior Cabinet colleagues apparently believes that going to the IMF would be like getting well-being care or even going to a spa to recuperate?

Alistair Darling: I do not visit spas or well-being clinics, so there we are.
	The hon. Gentleman has to realise that we and every other country in the world face the problem that something that started in the banking sector has led to a real global banking crisis, and that that has now spread into the wider economy. We can see the consequences of that: world trade has fallen—for example, exports from Japan are down by almost 50 per cent. That has had severe consequences for borrowing in not just our country but others. The question is what we do in the face of that. I believe that it is right to support our economy now, because if we did not, the situation would be worse for businesses and people. However, I have also made it clear, both in the pre-Budget report and last week's Budget, that our country must live within its means, and that is why, for example, I announced measures to halve the deficit over the next five years. The two things are absolutely necessary, but I am clear that simply standing back and letting nature take its course would be disastrous and would cost far more in debt and borrowing than the action that we are taking.

Brooks Newmark: Given that the Government intend that borrowing will be in excess of £1.4 trillion over the next four years, will the Chancellor please tell us how much debt the Government would be willing to take—both on and off balance sheet—before it became unsustainable?

Alistair Darling: As I was saying a few moments ago, it is important that we support the economy now. As I think the hon. Gentleman knows, as a result of what is happening, we, like other countries, have experienced a substantial drop in our tax revenues. For example, more than 25 per cent. of our corporate tax revenue used to come from the banking sector, so what has happened has had a consequence. In the face of that, he might argue that we should embark on wholesale cuts now, but that would be absolutely nonsense—

Brooks Newmark: No.

Alistair Darling: The hon. Gentleman says no—I agree with him—but that means that borrowing will be allowed to rise, which has a consequence on debt. At the same time, however, we must take action to ensure that we bring down borrowing and debt, and we have announced how we propose to do that. It is right and sensible to support our economy while ensuring that we have sustainable public finances in the long term.

Fiona Mactaggart: Is the cost of this borrowing to the economy not substantially less than it was the last time that this country had substantial debts, which was under a Conservative Government, when interest rates were in double digits for five to 10 years?

Alistair Darling: My hon. Friend is right. Part of this country's problem in the 1980s and 1990s was high inflation, which meant that the Bank of England had to raise interest rates to 16 and 17 per cent. In addition, many of the problems then were home grown. As my hon. Friend says, the difference now is that the effective rate at which we borrow is a lot lower then it was in the 1980s and 1990s. However, I come back to the same point, which is that we and other countries, faced with a worldwide problem, have a choice either to stand back and do nothing, as the Conservatives seem to advocate, or to take action. When one hears the Leader of the Opposition, as he did on Sunday, criticise the fact that our spending is increasing by £20 billion a year and imply that he would cut it, and when one realises that much of that spending is on unemployment benefit and other support for people, one really does wonder about the Conservative party's approach.

David Gauke: The Budget revealed the worst borrowing figures in our peacetime history and the Government's projection that they will not get back to a balanced budget for another eight years. However, the day after the Budget, it emerged that the Treasury's projections include an unexplained fiscal tightening from 2014 of £45 billion, the equivalent of £1,450 in tax rises per household. Why was there no mention of that in the Chancellor's Budget statement?

Alistair Darling: I did set out a path to reduce our borrowing over the next five years. The number the hon. Gentleman uses came from the Institute for Fiscal Studies last week. At this stage, when there is an awful lot of uncertainty out there, it is sensible to set a path that shows that, yes, we are supporting the economy now, but we are taking action to ensure that we reduce our borrowing over the next few years. To attempt to write a detailed Budget for 2015, 2016, 2017 or 2018 would be ridiculous when there is so much uncertainty, but it is important that we set out a clear direction of travel. The hon. Gentleman criticises me for saying that I will halve the deficit over the next five years and implies that he would go further. If the Conservatives think that we ought to reduce borrowing faster, I would be interested to know when they intend to spell out in detail what they would do to meet that target, instead of just hinting.

Taxation (Households)

John Baron: What estimate he has made of the amount of tax that will be paid by the average UK household in 2011-12 in comparison with 2008-09.

Stephen Timms: For a household with a single earner on average male earnings, the proportion of income paid in direct tax was approximately 19 per cent. in both 2008-09 and 2011-12, a little more than 20 per cent. in 2007-08 and more than 21 per cent. in 1997.

John Baron: Does the Financial Secretary understand that my constituents were fed up with paying more taxes under this Government, even before the Chancellor doubled the national debt? No one is fooled: a 50 per cent. tax rate may make it look as though the rich are paying more tax before the election, but after the election it will be average earners who are paying even more tax, because of increases in fuel duty and national insurance contributions, which by 2012 will cost every family in this country an additional £1,000.

Stephen Timms: Among the pieces of information that the hon. Gentleman gives his constituents, I hope that he will point out that they will pay less as a proportion of their income in direct tax in 2011-12 than they did in 1997 and that every basic rate taxpayer is, with effect from this month, benefiting from a £145 tax cut, thanks to the increase in personal allowances, which exceeds future national insurance rises. I hope also that he will have the courage to admit to his constituents that the Conservative party's only tax promise to date is to increase the inheritance tax threshold to beyond £1 million, which would do nothing at all for 97 per cent. of estates, but would give on average a £200,000 tax cut to a tiny handful—3 per cent.—of estates. His constituents might have second thoughts when he explains that to them.

Peter Kilfoyle: On the question of tax, specifically fair tax, is it not entirely consistent with Labour values and principles that those who have benefited most over the past 15 years—during the good times—such as the 17 millionaires on the Tory Front Bench, should be the ones who pay their fair share now that we are in a downturn? Does the Minister agree?

Stephen Timms: I think that my hon. Friend is absolutely right, and indeed the vast majority recognise that it is fair that those whose incomes have risen fastest, and those in the best position to do so, should contribute more.

Mark Harper: To pick up the question asked by the hon. Member for Liverpool, Walton (Mr. Kilfoyle), why does it fit with Labour values to tax everyone earning more than £20,000 a year by increasing their national insurance contributions—that is nothing more than a tax on jobs—and to save that increase until after the election?

Stephen Timms: The hon. Gentleman should perhaps have paid a little more attention to what I said a moment ago: the increase in personal allowances in income tax—that is, in the tax-free proportion of people's income—gives every basic rate taxpayer a tax cut of £145 from this year.

Stephen Hepburn: I read with interest at the weekend that certain celebrity millionaires, such as Sir Michael Caine, are considering leaving the country because of the Government's tax moves. Could they be reminded that it is ordinary, hard-working people, who pay money to watch their films, who put them where they are? We should give those celebrities the message that if they cannot support services for those hard-working people, such as the national health service, when the country is going through a bit of a problem, good riddance to them, and we should say, "Don't come back."

Stephen Timms: I say to my hon. Friend that I hope that Michael Caine is not going to leave the country, but I agree with him that at a time of crisis in the world economy it is fair to ask those who are in a position to do so to contribute more.

Philip Hammond: I think the situation is even worse than my hon. Friend the Member for Billericay (Mr. Baron) fears. My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) put his finger on it: the small print of the Budget Red Book shows us that if we fast-forward a couple of years, even with roaring growth in line with the fantasy forecasts that the Chancellor gave us last Wednesday, a further £45 billion-worth of tax increases would still be required. Will the Financial Secretary to the Treasury confirm that that equates to £1,450 a year extra tax per family? Is not the truth that behind the spin about taxing the few with a 50p tax rate, the reality is a secret Labour stealth tax bombshell, targeted at the many and timed to go off after the next general election?

Stephen Timms: I think I remember that poster. I can say to the hon. Gentleman that for the household that the hon. Member for Billericay (Mr. Baron) asked me about, and that we talked about—the household with the single earner and two children—the proportion of income spent on tax has gone down since 2007-08. It has gone down significantly since 1997, and we will protect the well-being of those families in the years ahead, both through our investment in public services and through the way in which we manage the tax system.

Savings

Daniel Kawczynski: What steps he is taking to encourage saving.

Ian Pearson: The Government recognise the importance of saving in providing people with independence throughout their lives, security if things go wrong, and comfort in retirement. Budget 2009 announced that from April 2010 the annual individual savings account investment limit will rise to £10,200, up to £5,100 of which can be held in cash. Those new limits will apply from October 2009 for people aged 50 and over. The Government also announced an extra £100 a year for the child trust funds of disabled children, with £200 per year for severely disabled children. In addition, the saving gateway will be introduced nationally in 2010 to encourage saving among people of working age who are on low incomes.

Daniel Kawczynski: The measures outlined by the Minister are in no way commensurate with the huge loss to senior citizens' savings as a result of the cut in interest rates. A great concern of the Shropshire Association of Senior Citizen Forums, which is 6,000 members strong, is the fact that members' incomes have been cut so drastically as a result of the cut in interest rates. What specifically are the Government doing to help those people?

Ian Pearson: As I just said to the hon. Gentleman, people over 50 will be able to see an increase in their ISA limits by October 2009. He will be aware of the capital disregard for pension credit and pension-rated housing and council tax benefit, which was raised from £6,000 to £10,000 when the Budget was announced. Again, that will come into effect in 2009. I recommend to him the Moneymadeclear website, which offers free, impartial advice on a range of savings products that have rates significantly in excess of the current Bank of England base rate. That is on top of the measures that we announced in the pre-Budget report to increase the basic state pension. We want to do the right thing by pensioners in this country, and we are doing that. I am sure that they will welcome the increase in ISA limits that we announced last week.

Patrick Cormack: If the Government believe so strongly in encouraging saving, why are they treating the Equitable Life victims so shabbily?

Ian Pearson: The hon. Gentleman will be aware of the report that we produced in response to the ombudsman's report on Equitable Life. We have announced that we want to make progress as speedily as possible, and we have asked Sir John Chadwick to provide us with advice. We are committed to introducing an ex gratia payment scheme as quickly as possible. We want to treat those who have suffered a disproportionate impact as a result of the events at Equitable Life, for which we have apologised, fairly and as quickly as possible.

Topical Questions

Ann Winterton: If he will make a statement on his departmental responsibilities.

Alistair Darling: The Treasury's responsibilities remain as I set out at the last Question Time.

Ann Winterton: The UK is in a deflationary period at present, but when the billions of pounds of taxpayers' money feed through into the economy, especially money that has been quantitatively eased or printed, inflation will follow, as night follows day. What action will the Chancellor take to minimise the effects of inflation, especially for the most vulnerable in our society, who are always the hardest hit?

Alistair Darling: The hon. Lady is quite right that we always need to be mindful of the harm that inflation can cause, which is why we set the Bank of England an inflation target of 2 per cent., which I confirmed again last week in the Budget. The Bank of England has been operationally independent of the Government for more than 10 years, and that has been widely supported and accepted. However, the Bank has a responsibility to meet that target, both in setting out how much it will put into the economy through quantitative easing and in its interest rate policy. The key is to make sure that we keep inflation low. At present, as the hon. Lady would accept, the objective is to make sure that we get credit flowing through the system, particularly for businesses but also for individuals. The Bank of England has that responsibility, so that is the answer to her question. That regime has worked, and it will continue to work in future.

Hugh Bayley: A company called IPS (First) has won a contract to build and operate a packaging plant at the Nestlé factory in York. That will create 100 jobs initially, rising to 200 over time. There are plenty of small and medium-sized enterprises such as IPS with good business proposals that want to invest and create jobs, but they need support from their banks. What are the Government doing to get the banks lending again to those small and medium-sized businesses?

Ian Pearson: I congratulate IPS on its expansion. Only last week I visited a company, Vectura, in the south-west, where I opened a new factory. There are businesses that are continuing to thrive and expand during these difficult economic times. It is right that we put pressure on the banks to ensure that they make lending available to businesses at competitive rates, which is why my right hon. Friend the Chancellor announced the legally binding commitments that RBS and the Lloyds Banking Group have made, totalling £27 billion this year in additional lending to businesses. We monitor that lending—the Bank of England produces monthly reports that look at it very closely indeed—and we want to make sure that it is available to viable businesses that want it. We want to see more companies such as IPS expanding in the UK in future.

George Osborne: As the Chancellor knows, the growth forecasts that he gave us in the Budget last week, which predicted a return to boom levels of growth in just two years, and that the economy would stay at those boom levels, were greeted with near-universal derision, yet they were the fiction on which he constructed every other Budget forecast. When he gave those forecasts, did he know that the IMF was planning to contradict them flatly just an hour later?

Alistair Darling: Yes, of course I knew the IMF forecasts. The IMF takes a more pessimistic view, not just of our economy but of every economy across the world. However, we ensure that our forecasts are based on the information that we have. If hon. Members look at the IMF and its forecasting over the past three months, they will see that it has downrated its forecasting three times since last October, which demonstrates the uncertainty in the system. However, I believe that because of the action that we are taking, because of the fact that we have low interest rates, because inflation will be coming down this year, and because of the action that most other countries are taking to look after and support their economies, that will have an effect, which is why I remain confident that we will see growth return towards the end of this year.

George Osborne: Frankly, I do not think the Chancellor is in any position to lecture anyone else about downgrading their forecasts after last week. Is not the truth this—that the dishonest Budget has completely unravelled in the space of just a week? We have seen the IMF produce those growth forecasts, which were wholly different from the ones given an hour earlier to the House of Commons. We have the CBI saying that there is no credible or rigorous plan to deal with the deficit. We have the Institute for Fiscal Studies pointing to the black hole, and yesterday a former member of the Cabinet, beside whom the Chancellor sat at the Cabinet table, said that his tax plans were a breach of a manifesto promise that is damaging not just to the Labour party, but to the economy. Today we had the Prime Minister getting a lecture in prudence while he was in Warsaw. We are used to Polish builders telling us to fix the roof when the sun is shining, but not the Polish Prime Minister as well.
	Does not the collapse of the Budget in the past week and the damage to the Chancellor's credibility make an almost unanswerable case for an independent office for Budget responsibility, so that we get independent forecasts on Budget day and the assumptions of the Budget are believed by the public?

Alistair Darling: No. The big difference between us is on the action that the Government should take, faced with a downturn of the magnitude that we see today and the problems that we and every other country are facing at present. The hon. Gentleman's solution is to stand back and let nature take its course. That is a price that I am not prepared to pay. I have set out in the Budget measures to help not only individuals, especially those who may be facing unemployment and need help to get back into work quickly, but businesses in this country. We also ensured over the past few years that we went into the downturn in a position where the Bank could reduce interest rates, unlike in the past, when interest rates had to be increased. The action that we have taken to help the economy now and the action that I set out to get borrowing down again is realistic and sensible, given the situation that we face. The question that the hon. Gentleman will have to answer sooner rather than later is, if he is critical of all that, what exactly is he proposing in relation to public spending? What exactly is he proposing to do to help people and businesses in this country? At present that is absolutely opaque.

Eric Martlew: Many small businesses in my constituency have suffered from the problems of the credit crunch. However, they have benefited from the "time to pay" initiative, which is a Government initiative that allows them to defer tax. Has any assessment been made of how many businesses in Carlisle have benefited from that?

Stephen Timms: Yes; we are monitoring carefully the impact of that service around the country. I can tell my hon. Friend that more than 1,200 businesses in Cumbria have benefited, enabling them to defer, between them, £15 million. Across the country 116,000 businesses have deferred £2.1 billion in tax, very often with a single phone call. I met a company chairman last week who described the service to me as "brilliant". We are providing real help now for businesses in my hon. Friend's constituency and across the country.

Richard Ottaway: My hon. Friend the shadow Chancellor mentions the joint press conference in Warsaw this morning, but is the Chancellor aware of what the Prime Minister of Poland said? He said that the Poles had fared so well because they behaved with
	"full responsibility in terms of their deficit",
	that
	"the method to cope with the financial crisis was not to increase expenditure",
	and that Warsaw had
	"efficient supervision to banks and sticking to the rules...not exaggerating with living on credit. These are the most certain ways of avoiding"
	the consequences
	"of the financial crisis."
	Does the Chancellor agree that the Polish Prime Minister made our Prime Minister look a bit of a novice?

Alistair Darling: Sadly, I did not have the benefit of listening to the Polish Prime Minister, but I am glad that Poland has managed to do so well over the past few years. I am sure the hon. Gentleman will recognise that there are differences between Poland and other countries. If we look around Europe—I am glad that Opposition Members are now prepared to look at Europe and cite other European countries with approval; that is certainly different from how it used to be—the more developed economies in Europe have experienced exactly the same difficulties as we have, as America has and as Asian countries have. There is no country in Europe, Poland included, advocating the present policies of the Conservative party.

David Kidney: May I ask the Chancellor and his Ministers to show their support for the UK arm of the global business, Caterpillar, a much valued manufacturer and exporter of construction equipment, diesel and gas engines and electrical power generating equipment, employing more than 10,000 people in the UK, including many hundreds in Stafford? It is taking all the right decisions to weather the economic downturn and to keep together its business, skill sets, supply chain partners and research and development, but it shares many of the same stresses and strains of the car and commercial vehicles sectors. The company says to me in a briefing today that the inability of—

Mr. Speaker: Order. At Topical questions, it is very important that the supplementaries are brief.

Ian Pearson: I am certainly aware of Caterpillar, which is a globally organised company and a significant employer in the United Kingdom. It is in the same market segment as the automotive industry and companies such as JCB, which is not far from my hon. Friend's constituency. Caterpillar is eligible for the Government's £2.3 billion guarantee scheme through the automotive assistance programme, and I am not aware whether, for instance, it has contacted the European Investment Bank for loans, but it might want to consider that. I should be very happy if Caterpillar wanted to meet Department for Business, Enterprise and Regulatory Reform officials to talk about the automotive assistance programme and the support that we can offer.

Andrew George: In view of the increasing pressure on the budgets of public bodies, what will the Chancellor do to ensure that match funding is available for the European funding programme, and particularly the convergence programme? There is a shortage of money for those areas, particularly for the convergence regions, which are, after all, the poorest in the UK, and there is a need to mitigate the sharp depreciation in sterling, given that European aid is drawn down in euros.

Yvette Cooper: The hon. Gentleman makes an important point. He will know that we have supported many of those programmes, which include funds from Europe, to support regeneration throughout the country. That is why we are honouring and supporting the three-year budgets that we set for local councils and continuing with support for regional development agencies and other agencies throughout the country. It is right to continue to invest to support the recovery, and not to cut public spending in the middle of the recession. That would be devastating not only for recovery but for the public finances, because it would push up costs in the long term.

Jim Dobbin: Mr. Graham Whiteman, managing director of Aerotech Design Consultants, and Mr. Michael Pedley, managing director of Middleton sheet metal, two growing aerospace companies in my constituency, are keen to access bank loans as soon as possible, especially to encourage their export potential. Can the Chancellor offer them any hope at all? Would it be possible for a Treasury Minister to meet me and the two directors? They have some really good ideas.

Ian Pearson: My hon. Friend rightly points to the importance of the aerospace sector to the UK economy. It is one reason why, through BERR, we have for a number of years had an aerospace innovation and growth team approach that has been highly successful. Aerospace companies have been accessing funds through the Technology Strategy Board for long-term research and development. He points to the need for bank finance and particular loans, but for small companies with a turnover of up to £25 million the enterprise finance guarantee is a potential route. None the less, I should be happy to meet my hon. Friend and representatives of the two companies, along with officials from BERR and the Treasury, if appropriate, to discuss whether further assistance might be available.

Daniel Kawczynski: My hon. Friend the Member for Croydon, South (Richard Ottaway) raised with the Chancellor a very important point about the Polish Prime Minister's extraordinary criticism of the UK Government. The Chancellor dismissed Poland out of hand—almost as though it were a developing country. But it is not; it is a very important European economy. What is his answer to the Polish Prime Minister's very robust critique of this Government's mismanagement?

Alistair Darling: The hon. Gentleman is rather twisting what I said. I said that Poland has made very good progress over the past few years. As he very well knows, Poland, like so many other countries in eastern Europe, was saddled with being under the Soviet union for many years after the war. It has come through that, and it has established itself as a successful economy. Like all economies, it has had problems. The wider point that I was making is an important one: that across Europe, countries are being affected in the same way as we are because of the banking crisis that has spread into the wider economy. Whether in Poland, France, Germany, this country, Asia or America, the question is the same: what do Governments do in the face of this? Do they stand back and hope for the best, or do they do something to support their economies so as to support families and businesses? That is the right thing to do, and Poland recognises that as well.

Natascha Engel: As I am sure that my right hon. Friend the Chancellor is aware, I have recently been involved with setting up the all-party group on insolvency. With that in mind, will he tell me what he is doing to fight the culture of fear around insolvency which often prevents businesses and individuals from seeking help before it is too late?

Ian Pearson: As my hon. Friend will be aware, we announced in the Budget a package of reforms that we want to consult on with regard to insolvency legislation. We have great strengths in our insolvency system, but she is right to point out that these extraordinary economic times are putting major pressure on insolvency practitioners. We have learned some lessons from that. I would be more than happy to come to the all-party group to discuss insolvency issues, and I am sure that the Minister for Employment Relations and Postal Affairs, my right hon. Friend the Member for Wolverhampton, South-East (Mr. McFadden), who leads on insolvency in BERR, would be happy to do likewise.

Henry Bellingham: On a number of occasions during the past week, the Chancellor has stated that he wants to reduce the burdens on business. Bearing that in mind, does he agree that now is definitely not the time to be pushing ahead with the Equality Bill, which will pile extra costs and regulations on businesses of all sizes, and will he join the Business Secretary in pushing to have the Bill abandoned?

Angela Eagle: I do not think that there is any contradiction between ensuring fairness and freedom from discrimination and good business practice. I am discouraged, to say the least, but not surprised that that attitude still thrives on the Conservative Benches.

Lindsay Hoyle: Will my right hon. Friend the Chancellor look to holding a job and finance conference in which we can get banks, businesses, manufacturing industry and trade unions around the table to see how we can ensure that jobs are protected; and will he look to introducing the short-time working subsidy in order that manufacturing can survive to the end of this recession?

Alistair Darling: I will continue to do everything possible to ensure that we help people who lose their jobs to get back into work. In relation to my hon. Friend's point about job subsidies, I repeat what I said in the Budget last week: for people who have families and children and whose incomes go down, the tax credit system compensates for that. In March alone, more than 355,000 people got £35 a week extra as a result of the measures that we have taken. That marks a difference between Labour Members and the Conservatives: we are prepared to help people, because all the experience shows that if people are left on their own, without help, as we saw in the 1980s and 1990s, that can have disastrous social and economic consequences.

Philip Hollobone: Last year, the Chancellor planned to borrow £120 billion by 2013, and this year he announced plans to borrow £606 billion by 2013—a sum greater than the GDP of Australia. What threat to Britain's sovereign triple A debt rating does that level of borrowing pose?

Alistair Darling: As I said earlier, the reason we have allowed borrowing to rise is that in the face of the downturn and the problems that every country is having to confront, that is the right thing to do. It is equally important, though, that in the medium term, like every country, we have to live within our means, and I set out how we propose to do that.

Reserves (Review)

Bob Ainsworth: With permission, Mr. Speaker, I would like to make a statement about the report on the strategic review of reserves, which I am publishing today and which has been placed in the Library of the House.
	I know that the House will join me in paying tribute to Britain's reserves. They make an important contribution to current operations, serving with dedication and commitment alongside our regular forces. As I speak, more than 2,000 reservists are on operations in Afghanistan and Iraq on tasks ranging from fighting on the front line to force protection and medical support. That is 8 per cent. of our forces deployed. Reservists have served with distinction in all the conflicts that our forces have faced in recent times, from the Balkans to Sierra Leone. Some 18,000 have been deployed to operational theatres since 2003. Since then, 15 have made the ultimate sacrifice by giving their lives on our behalf. When I visit operational theatres, I never fail to be impressed by the men and women of our reserve forces who give up their time to serve their country.
	However, it is not only the armed forces that benefit from our reserves. Society does too. Individual reservists learn and develop leadership, problem-solving and confidence-building skills that make them more capable employees and citizens. They also make a crucial contribution in the United Kingdom, helping out in emergencies from foot and mouth to flooding to providing cover during the firefighters' strike.
	The demands faced by our reservists have changed considerably, and we are using them more than we have before in peacetime. We need them to do more than simply prepare to defend the UK in the event of major conflict. We require them to augment our regular forces on expeditionary operations, yet the structures, training and organisation of our reserve forces have not changed to match that requirement and now need to be overhauled.
	We owe it to our reservists, their employers and their families to ensure that they are supported to face the challenges of today and the future, not of the past. People wrongly say that this is about tackling stretch by using the reserves to plug gaps in the regular forces. That is not the case. It is, in fact, about optimising the contribution of all elements of defence today and in the future. The reserves are an integral part of that, and are themselves overwhelmingly keen to play a relevant role in current operations.
	That is why last year my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne) commissioned a strategic review of reserves. As a result, for the first time in recent years, the reserves have been the subject of a review in their own right. The review was conducted by a small team led by Major-General Nicholas Cottam, which consulted openly throughout defence and beyond. It listened carefully to the views of the reserves community, including the reserve forces and cadets associations.
	General Cottam's comprehensive review addressed all strategic aspects of reserve service. I am today placing copies of it in the Library of the House and on the Ministry of Defence website. As one would expect from such a careful analysis conducted over several months, it is very detailed. We have therefore produced a summary of the review, which will also be placed in the Library today. General Cottam confirms that the summary report accurately reflects his review. It also indicates how we shall take forward this important work.
	General Cottam's work offered seven strategic recommendations. I am pleased to announce that we are accepting all of them. They flow into more than 80 detailed recommendations. General Cottam was not asked to produce an implementation plan, as his review was properly designed to be strategic. Consequently, some of his detailed recommendations will require considerable further scoping work, taking into account resources and priorities across defence. That will make for difficult choices, but the review provides the solid foundation on which they can be made. I am, however, pleased to announce that around half the recommendations will be implemented immediately.
	The review has redefined the "purpose" of the UK's reserves, and notes that they provide defence with a cost-effective way of retaining certain specialised skills. Precisely those niche capabilities and that depth of personnel prove so invaluable in our current operations. The review also acknowledges that reservists may remain vital for supporting national resilience and it recognises the very important role that they play in connecting the armed forces with the nation.
	A key tenet of the review is bringing greater clarity to reservists about what we expect of them and what they can expect in return. That has been captured in the "Proposition", which sets out for the first time what reserve service offers. Specifically, it states that we must ensure that
	"we continue to offer the challenge and reward which attracts people to volunteer, while giving a firm undertaking to provide them with effective training and the best possible support throughout their service, including when mobilised and recuperating."
	Part of that challenge is the opportunity to lead and command, which is why General Cottam's detailed recommendations include proposals for officer recruitment and education. If we deliver the "Proposition"—I am determined that we will—the outcome should be a better trained, better organised reserve, better able to deliver its tasks.
	I should like to give the House a few examples of what we are doing now to help achieve that outcome. We shall develop better and more flexible terms and conditions of service, which will allow a range of different forms of reserve service as well as easier movement between the regular and the reserve services by removing complexity and administrative barriers.
	Reservist training will be refocused, with a greater emphasis on preparation to support current operations. Initial training will be restructured so that new recruits receive sufficient military skills to participate in their units' collective training within six months of joining, and are fully trained and eligible for mobilisation in three years. Routine training will also be reviewed and sufficient man training days allocated to ensure that annual military competency standards can be achieved by all.
	The Territorial Army will be better integrated with the regular Army to ensure that, combined, they are best structured to support current and future operations. That will include stopping reservist tasks that are no longer needed, thereby bringing efficiencies and enabling manpower to be used for higher priorities. Some tasks of that nature have been identified during separate work as part of the Department's annual planning round.
	As mentioned in the review, certain elements of 2 (National Communications) Signal Brigade are identified as no longer having a clear operational role. That is partly because they hold capabilities that are no longer current, and partly because their tasks can be achieved elsewhere in defence, not least because of improvements in wider national resilience.
	In addition, some TA signals units operate communications equipment that is now obsolete, and those posts will be removed. They include Headquarters 12 Signals Group and 33, 34 and 35 Signals Regiments—it is logical to reallocate those resources to higher defence priorities. That decision has not been taken lightly and we are very aware of the exceptional contribution made by the Royal Signals within the TA. However, we must focus resources where we need them most. Where possible, those affected by the decision will be offered other opportunities in the TA, and we will conduct further work to determine the most effective configuration for the TA Royal Signals. As I said, those decisions were taken separately from the reserves review, but they are entirely consistent with it.
	We shall also rationalise and improve the way that we approach the civil contingency reaction force and the part that it plays in wider national resilience tasks. That will make it more effective and less burdensome to the units involved. We shall also be working closely with the Department for International Development to determine how best to employ niche reservist skills in support of stabilisation operations.
	We need to rationalise the reserve estate. Some of it is underused, out of date and in poor repair; some of it is simply unacceptable for modern military use. In some places, sites sit near to one another, while elsewhere the reserve has no footprint at all. I am therefore setting in train work to deliver a modern, better managed and fit-for-purpose volunteer estate. This important work will take time and I am determined that it be done properly.
	Employers play a vital role in delivering and supporting our reserves. They bear the gap while an employee is training and an even greater one when reservists are away from the workplace on deployed operations. We are very fortunate that so many of our employers are so accommodating of the demands that go with a reservist commitment. They recognise the additional skills and qualities that individual reservists can bring to any organisation, but we want to work better with employers. We shall continue to provide assistance and support to them through our employer support organisation, Supporting Britain's Reservists and Employers, which is commonly known as SaBRE. In addition, we shall give greater direction to the reserve forces and cadets associations, to ensure that their excellent work in support of the reserves is more coherent and co-ordinated.
	The review that we publish today is important for our armed forces and for Britain's reserves. It makes it clear that the two are not separate; rather, that the reserves provide an integral part of our military force structure. The review provides a firm basis from which we can work further to develop and improve our reserve forces and how we support them. I believe that this is an exciting opportunity for our reservists. The review's outcome is a comprehensive piece of work that has been welcomed by the single service chiefs. The review is a blueprint to ensure that our reserve forces have a clear and bright future to match their illustrious past, and I commend it to the House.

Liam Fox: The whole House can and will take pride in the achievements of our reserve forces. We pay tribute to the sacrifices that they have made for the security of our country. Like many hon. Members, I have met our reserves in Iraq and Afghanistan, and I have never failed to be impressed by their professionalism and courage.
	I am slightly surprised that the Minister failed to acknowledge the important role of the 234 TA troops currently serving on the green line in Cyprus, as part of Operation Tosca, although I am sure that that was an oversight. This is the first time that Op Tosca has been fully resourced by the TA, which deserves congratulations on the work that it has done.
	The main focus of the Minister's statement was the TA. Very little—in fact, I think nothing at all—was said about the Royal Naval Reserve, the Royal Marines Reserve or the Royal Auxiliary Air Force. How will the report impact on those forces? I am sure that the members of those reserve forces serving in Iraq or Afghanistan will be surprised, to say the least, that they seem to have been omitted today.
	We welcome the genuine attempt to improve and expedite basic training for both soldiers and officers, but could the Minister tell us what assessment the Government have made of the attractiveness to potential recruits and, more importantly, employers of condensing basic training into six months? It also surprised me a little that there was no mention in the Minister's statement of the welfare issues affecting our reservists and their families. Perhaps he can tell the House in his response what measures in the report's recommendations will improve the welfare of our reserve forces and their families.
	I am sure that the Minister would agree that it is a major disincentive when regulars take a disproportionate number of places at the top of TA units. Will he assure the House that, when reservists can carry out a role, they should do so, and that, when appropriately qualified, reservists will have priority?
	The Minister said at the beginning of his statement that the reserve forces make a crucial contribution in emergencies. Surely it would be more accurate to say that they have made such a contribution, because the Government are effectively abandoning their own plans, set out in 2002, for the civil contingency reaction force. Who is going to carry out that role, if not the TA? The assumption seems to be that the blue light services and the regular services will assume that responsibility, but the regular Army is already overstretched and is increasingly being concentrated into super-garrisons. So, let me get this right: with a potential flu pandemic at our door, the Government are abandoning their own civil contingency reaction force and, instead of using the widespread footprint of the TA across the country, they intend to depend more on the regular Army, which they are concentrating in fewer and fewer geographical locations. Are they kidding us?
	No one can argue with the need to rationalise the reserve estate, but the Minister says that detailed work needs to be done first, and that it could take some time. Hmm. Will he then tell us why the Government have a figure of £75 million in the MOD budget for financial year 2011-12 as a contribution made by the reserve estate? How did they arrive at that figure? Has some work already been done, or has that number simply been borrowed from the fantasy figure library that the Chancellor has been putting to such good effect recently?
	I have a further point about money. In the discussions that the Minister has had with the Department for International Development on using reservists in support of stabilisation operations, has he discussed transferring any elements of DFID's funding for that purpose? If so, how much?
	In 1997, the establishment figure for the TA was 59,000. Today, the figure is 58,500, even though the current strength is only 28,920. Following the Minister's statement today, what will the establishment figure be? Given that the TA has been funded to only 83 per cent. of its capacity in recent years, what will that figure be today? Simply put: how much is the TA being cut by, and how much money will it get?
	Despite General Cottam's excellent work, changes to the shape of our armed forces should be made within the context of a strategic defence review—which is hugely overdue—and not in this piecemeal fashion. I am afraid that this statement is short on detail and indicative of a Government who lack direction. If the Minister really wants to abolish obsolete bodies and make them disappear, I am sure that the voters will be only too happy to help.

Bob Ainsworth: It is traditional to thank the hon. Gentleman for his response. He is right about Op Tosca; I am sorry that I did not mention it. He is, however, totally wrong about my omitting other reservists. I mentioned the reserve throughout. Obviously, I concentrated on the TA because the measures that have been taken in the spending round apply to the TA. He should not be surprised that I majored on that issue and did not try to hide it from the House.
	The hon. Gentleman asked about the establishment. There are no plans to take any further cuts in the establishment. Indeed, the report proposes increases in the establishment of the other services—the naval and air reserves. However, the figures for the deletions that are being made in the Signals Regiments amount to around 2,000 individuals. Of course, that would come off the establishment— [ Interruption. ] The hon. Member for Woodspring (Dr. Fox) is right: there will be more than that in terms of posts, but in terms of individuals in place, about 2,000 people will be affected.
	With regard to welfare, paragraph 3.5 on page 21 of the report says that we must recognise the needs of reserves during their deployment and through into their period with the reservists. We have made commitments in the service personnel command paper to improve welfare provisions, and those will apply to regular forces as well as to reservists.
	The hon. Gentleman mentioned money and I wondered whether he would. He knows that I am trying desperately to help him at the moment by getting information out of the shadow Chancellor that might be of use to him, and I shall continue in those endeavours. He is right to say that the review does not print money, but it does spell out a strategic framework against which the reserve will have an opportunity to bid for defence resources more effectively than it otherwise would.
	On the civil contingency reaction force, the important thing is that we keep the command and control mechanism in place so that people can be called up when they are required. We need to relieve the reserves from burdensome training that they do not really need to do, and which they do not welcome, in order to give them more effective, higher level training that will make them better reserves and more able to augment our regular forces.

Des Browne: I thank my right hon. Friend for his statement, and may I ask him to pass on my personal thanks and appreciation to General Cottam and his team for a job that I am sure was extremely professionally and well done? I have not had the opportunity that the hon. Member for Woodspring (Dr. Fox) may have had to read the whole report; I have not seen it at all, but I shall study it carefully and I may have further observations to make.
	I agree with the points that have been made, and I am sure will be made by those on both sides of the House, about how our admiration for our reserves increases by the day. From my experience in the last year in which I was Secretary of State for Defence, I know that increasingly, on every operational visit that I made, it became impossible to tell the difference between the regular members and the reserves of any of the three services. That is the highest compliment that I can pay reservists and, indeed, it was the compliment paid to them by regular members of all three services in my presence on many occasions.
	The strategic review's strength was that it was wanted by the reservists; the loudest voices of welcome for it came from reservists themselves. That strength was augmented by the way in which General Cottam conducted the review in a transparent and inclusive fashion. I just wish to ask my right hon. Friend two questions. First, can we continue that inclusiveness and transparency by developing an implementation group, as we did in the Department on other occasions to ensure that those who were consulted were included in implementation? The second is a plea on behalf of the south-west of Scotland, which gives a lot of people to the services, but has very little footprint of the reserves in its communities. Can we have some please?

Bob Ainsworth: I thank my right hon. Friend for that; indeed, he established this review in the first place, so he understands better than anyone the need for it. As he rightly says, the members of the reserves are extremely impressive and highly capable people who have a real desire to serve in today's operations. What we are really seeking to do is to catch up with the movement that has been effectively made on the ground by putting in place, through this review, the systems that are necessary to serve them in doing that.
	My right hon. Friend raises two specific points. I can tell him that an implementation group is set up to look at the individual recommendations, and I assure him that I will see to it—I am sure that those involved will want to do this in any case—that it will be as inclusive as possible in how it goes about its work of deciding which of those recommendations should be taken forward and in what way.
	The point that my right hon. Friend makes about Scotland can be made about many other parts of the United Kingdom too, and this is why there is a need to modernise the estate. I heard hon. Members talking about flogging it off, but much of the estate is not even owned by the MOD. We bear the costs of the maintenance of that estate, and it is not appropriate and not fit for purpose, so we need to spend in new areas.

Nick Harvey: I, too, wish to put on record my respect and admiration for the reserves, who are undoubtedly a valuable part of our armed forces. We have used them more and more in recent years, sending them to the front line much more than previously, and it is no surprise that the National Audit Office observed in its report that there are parts of the armed forces that simply could not manage without the reserves.
	I thank the Minister for his statement and for advance sight of it, but it poses more questions than it answers and it is scant on detail. He tells us that there are seven strategic recommendations and 80 detailed ones. I notice that he was on his feet for 14 minutes and I should have thought that he could at least have told us what the seven strategic recommendations are in that time. Can he guarantee that we will get a further chance to ask questions when we have had sight of them? We have no idea of the extent of the changes that are being considered, or whether they will cost more or less. Nor do we have any sense of the time scale for the introduction of the measures or the likely impact on the wider armed forces.
	The NAO also observed that reserve forces cannot be a substitute for the regular armed forces, given the inherent limitations in training time and the fact that they are not able to deploy as quickly as high-readiness forces. The Minister must surely accept that nothing in this review can change that.
	We know that we will have an ongoing role in Afghanistan for many years, and we will be involved in the Balkans for some time yet. Given the burden that we have placed on the Territorials in recent years, can the Minister give us some indication of what that will mean for their numbers? If after everything that they have done their numbers are cut, it will feel like a slap in the face.

Bob Ainsworth: The hon. Gentleman says that we cannot manage without the reserves as if we should try to do so—

Nick Harvey: Absolutely not.

Bob Ainsworth: I am glad to receive that response, because we should not be managing without the reserves. We should see them as part of our armed forces, and we should try to make them as relevant, as competent and as useful as they can be. That is what the enthusiastic individuals who volunteer for the reserve want, so it should be no surprise that we are using them. They are enthusiastic about being used, and the report is about enabling them in that regard.
	The hon. Gentleman complains about lack of information. The report should have been passed to him before the statement. I acknowledge that he has not had sight of it and I apologise for that administrative error. I meant to get both my statement and the report to both Front-Bench spokesmen before we started. I have tried to be as open as I can and I have engaged with the all-party group on reserve forces. We have another meeting later this afternoon and I know that there is a level of interest and expertise in the House that needs to be fed into this review. I also know that General Cottam appreciated the information that he received.
	The hon. Gentleman talked about numbers. It is difficult to predict what will happen, but there are no proposals for cuts in the reserves other than those that I have mentioned in the two areas. If we make the reserve as relevant, capable and deployable as we can, and if we put the work into understanding that capability, the potential is that the reserve will grow, because we will understand the risks that are associated with giving any particular issue over to a reserve capability. That will develop over time, and I hope that the reserve will at least give options to planners in providing capability.

Mike Hall: I am very concerned about the announcement made by my right hon. Friend as regards the Crown Gate Territorial Army training centre in Runcorn. It is a modern purpose-built facility and is the home of 80 Squadron, part of 33 Signal Regiment, which he has announced will be disbanded forthwith. It is also the home of the Army cadets and the Navy cadets. As he will be aware, Runcorn is very important for recruitment to the armed services in the north-west. I am extremely anxious that we maintain the reservist footprint in the town. Will he give me some assurances about the future of that centre in my constituency?

Bob Ainsworth: I thank my hon. Friend for that question and I am not surprised that he is concerned. The decision that we have taken is not about the facilities in his constituency, but about the capability provided by the Signals Regiment that is only a part of, and only one user of, those facilities. As I have said, it uses equipment that is now obsolete. I am happy to meet my hon. Friend to see whether we can find ways of continuing to use the facilities—if they are as good as he says, we should certainly do so. We need to maintain our support to the Army and Navy cadets.

James Arbuthnot: Will the Minister forgive me if I say that I found his statement a little thin on detail? I am sure that when we read the report of Major-General Cottam, who has done extremely good work, we will find it very meaty. However, the impression that I have from the Minister is that he is managing decline rather than inspiring recovery. What will come out of this statement that will bring the reserves up to their complementary strength?

Bob Ainsworth: Two things more than any other will help us to continue to inspire people to volunteer, both of which I mentioned. I am sad that the right hon. Gentleman did not recognise that. The first is the proposition to lay out for the first time what we expect of our reserves—it is strange that it has never been spelt out, but it has not—and what we offer in return. The second is the need to bring better quality, more relevant training to people. If we do not give them support and opportunities, as well as the training that is needed to exploit those opportunities, who will be surprised if we struggle to attract the volunteers that we need? I think that the right hon. Gentleman will find, as he digs into the report, that far from managing decline, these moves have the potential to make the reserves relevant for the next century, as they have been for the last.

Brian H Donohoe: May I first put on record my appreciation of the work done by the two Territorial Army units in my constituency? Will my right hon. Friend explain exactly how these new and additional resources will be made available to them? Like my right hon. Friend the Member for Kilmarnock and Loudoun (Des Browne), may I too make a bid, in this case for the super-garrison to be in Central Ayrshire?

Bob Ainsworth: My hon. Friend is a supporter of the reserve forces, as he is of the armed forces overall. Our statement today does not cover super-garrisons, I am afraid, but his bid is noted. We are trying to ensure that we shift resources so that we better cover the geographical area of the country by remodelling the estate—that is central to the changes that we are making today. If we improve the training, make it relevant and drop that which is irrelevant—the unnecessary burdens—we will give people a far better offer and be able to attract them to the reserve units in his constituency.

Malcolm Rifkind: The Minister cannot expect the House to be impressed by his suggestion a few moments ago that the reserves might actually grow in strength, on a day when he has just announced a further 2,000 cuts in their manpower. He will not deny that since this Government came into power, the reserves have virtually halved from 62,000 to 33,000. If, for perhaps sensible reasons, it is necessary to terminate the three Signals Regiments, would it not be fair to the reservists, when they are being used to a degree that is unprecedented in our history, for the 2,000 manpower that is being saved from the Signals Regiments to be allocated elsewhere in the TA?

Bob Ainsworth: Where individuals are affected by the changes to the Signals Regiment, which I think the right hon. and learned Gentleman recognises are necessary, we will seek to use them and absorb them in the reserve. That will not be possible in every circumstance. Those people may not want to do other jobs, but where they do we shall do our level best to continue to use their enthusiasm. The point I was making about potential growth is that, better managed and better understood, the risk of allowing some capability to be rested entirely within the reserve will be reduced. Over time, there will be potential for the reserve to be used in areas where people have not dared to use it in the past and, therefore, the reserve might grow.

Lindsay Hoyle: May I say to my right hon. Friend that this leaves a dark cloud over the TA? We have uncertainty and a lot of questions that need to be answered. We ought not to be reducing the strength of the TA; it gives us the best value for money in the British armed forces and certainly backs up our full-timers. As he has rightly acknowledged, if there is a difference between the regulars and the TA, it is the valuable work the TA gives us at a very low cost. Will he consider re-badging and re-rolling the Signals, and will he tell us about the implications of his statement across the country? May I have an assurance that it will not affect C Squadron in Chorley—my TA unit?

Bob Ainsworth: I am sad that my hon. Friend sees a dark cloud. I urge him to read the review where he will see that there is no such thing. We are standing down the elements that are not relevant to defence requirement. For us to continue with that would be ridiculous in the extreme. No other cuts are proposed; this is a strategic review, designed to put the reserve in a better place. It ought to be seen not as a dark cloud but as an opportunity.

Desmond Swayne: My interest is in the register.
	Will the Minister reflect on recommendation 50? Although the result may have more the character of an agreed merger than a hostile takeover bid, ultimately the outcome will be same: we will have lost an Army with its own ethos and acquired a mere reserve, and something of value will have been lost.

Bob Ainsworth: This is an important issue. The balance between enabling a career structure for reservist officers and appropriately integrating and using them alongside regular forces will be difficult to strike, but there are times when reserve units should be and are commanded by regulars—there are times when the chain of command decides that is a good thing for a particular unit—but if that is overdone, the hon. Gentleman is quite right: we turn off the talent that could be coming into the reserve wanting to be officers and to progress as officers. I give him an assurance that it is the intention to try to get that balance right.

David Drew: Does my right hon. Friend accept that before changes are made to the real estate, it is always useful to talk to local Members, because they have knowledge about accessibility to those premises and how a sudden change could dramatically affect both recruitment and the willingness of those in the TA to continue to serve?

Bob Ainsworth: My hon. Friend is right, but if there is one thing about which I have absolutely no doubt it is that given the level of interest and expertise in the House, any changes to the estate will be discussed with local people, whether proactively or reactively. There will be no attempt to run away from that.

Angus Robertson: The Scottish National party pays tribute to our reserves. We welcome the review but, like everyone else in the House, we are yet to see the details, so we will reserve judgment on them.
	Has the Minister had the opportunity to read this weekend's comments by the head of the Territorial Army in Scotland, Brigadier David Allfrey? He talked about plugging a serious gap in the recruitment of reservist officers and said that after a period of paid TA training, at no cost to their employer, employees facing redundancy could return to their companies in better economic times with new or improved management skills. In these difficult economic times, does the Minister agree that that sensible proposal merits closer inspection?

Bob Ainsworth: I have not read those comments but it sounds like they merit inspection. I think that the hon. Gentleman and others will be interested in a number of proposals in the report, such as military gap years and other ideas that individuals might wish to exploit.

Brian Jenkins: I welcome the statement, mainly because the Department accepted all the strategic recommendations, which represents a refreshing approach.
	May I make a plea to my right hon. Friend that he never says that we are disbanding part of the armed forces because their equipment is obsolete, because that might make many parts of them feel under threat? Will he assure us that when we reconfigure the Territorial Army, we will do all that we can to ensure that its members receive all the technological support and equipment that the British armed forces can offer so that when they move into the armed forces, they are not put at a disadvantage by having to retrain on new equipment?

Bob Ainsworth: I am sorry that my hon. Friend was annoyed by what I said, but the fact is that the units that I was talking about exist, and are structured, to use the Ptarmigan communications system, which is now obsolete. It was in place to support the Allied Rapid Reaction Corps, but that is now supported by separate communications systems, so we no longer use or need the equipment. However, my hon. Friend is quite right to put forward his well-made point about integration and the need for interchangeable equipment.

Nicholas Soames: Does the Minister agree that a pull-through from university officer training corps to the TA is extremely important, and will he confirm the great value that he attaches to OTCs? Secondly, does he realise that the reserve forces will become most attractive if they are properly funded and have the equipment that they need to do the job that they can do?

Bob Ainsworth: The hon. Gentleman is right that funding for equipment is important. People want to be properly equipped when they join both the regulars and the reserves but, as he knows, that is not the end of the story. The right and relevant training is key to the offer that we make to the reserves, and that is central to the proposals in the report.

Nicholas Soames: And the OTCs?

Bob Ainsworth: I agree with the points that the hon. Gentleman made.

David Hamilton: I agree with the aspirations set out in the statement, but I am concerned that I am no wiser about some of the points that have been made because the statement was thin on the proposals, although I will read the report when it comes through. Will the Minister assure us that before we get into the details we will have a full debate in which we can not only discuss the acquisition or relinquishing of property, but cover the whole thing at one time? I get the feeling that we are talking about getting rid of some of the property without dealing with the bigger issue.

Bob Ainsworth: My hon. Friend is quite wrong. It will take anything up to 10 years to implement some aspects of the review, so I am certain that they will be discussed in the House again and again. I will remain engaged with the all-party group on reserve forces, and we will make written and oral statements whenever they are necessary.

Julian Brazier: May I thank the Minister for all the review's courteous exchanges with my all-party group on reserve forces?
	The review brings good news in the form of innovative ideas for training, especially basic training, but that is balanced with extremely bad news about numbers, especially given that the establishments of several units do not provide the critical mass for training. May I press the Minister on the point raised by my hon. Friend the Member for New Forest, West (Mr. Swayne)? The right hon. Gentleman rightly said that critical to the offer is opportunities for command. I urge him not to depart from the rule that most TA and Royal Naval Reserve units are commanded by reservists, where adequate reservists are available, so that we avoid a repetition of the truly shameful exercise whereby a group of senior regular officers in the Navy were able to brush away four strong reservist candidates and impose a regular officer, on the basis that he had more time available.

Bob Ainsworth: The principle espoused in General Cottam's review is that we should have the best person for the job. That is the recommendation against which the hon. Member for New Forest, West (Mr. Swayne) reacted—recommendation 50. General Cottam and I have already discussed the matter and we agree that, in deciding who is the best person for a job, we should take account of the unit's being a reservist unit, and the fact that the commander is a reservist will often be part of that assessment. As I said, sometimes the chain of command will decide for good reason that, at a particular point in time, it is appropriate that a regular officer commands a unit. However, we do not want to damage the career path—the ability to bring capable individuals into the officer corps—and we will do that if we take that too far.

Dari Taylor: I welcome the statement and look forward to reading General Cottam's comprehensive review of the strategic aspects of the reserve forces, but I have one question. In his statement, my right hon. Friend mentioned flexible terms of engagement or employment. Will he confirm that he may use such language? Will he explain how those terms will benefit medical reservists, who are essential to our deployed forces?

Bob Ainsworth: To be frank, I am not sure what impact they will have on medical reservists. I shall come back to my hon. Friend on that point. However, there are considerable barriers to flexibility in the terms and conditions of employment in the reserves. For instance, it is detrimental to an individual, on leaving the regular service, to go straight into the reserve. Is that sensible? Such people have all the skills and are capable soldiers, sailors or airmen, but the effect of the current terms and conditions is to discourage them from transferring straight into the reserve. I do not think that that is sensible, and nor did General Cottam.

Bernard Jenkin: May I read back to the Minister part of his statement? He said, "People wrongly say that this is about tackling stretch by using the reserve to plug gaps in the regular forces." Although we understand that he has to put a brave face on the decisions that he is having to take today, will he at least be realistic? Where would we be without the medics, the helicopter pilots and even the infantry reservists, and the professional Army had to try to manage current operations on its own? The reserves are filling gaps, and reducing reserve and TA forces further means that fewer gaps will be filled when we need to fill them.

Bob Ainsworth: The hon. Gentleman talks as though we should not augment the regular forces with the reserve—as though we should stand them aside in readiness for the old cold war scenario of the Russians coming over the western plains. That was the purpose of the reserves for a period in our history, but that is not what they want to do or what they have been doing for some time. We will not attract the individuals we want to attract if we do not make them relevant to current operations. Yes of course we want to use the reserve, and it is appropriate that we do so.

Linda Gilroy: My right hon. Friend mentioned the Defence Estates review. In 2006, the National Audit Office's report found that there was "little understanding" in defence of the overall "costs of Reserve Forces". Will he say whether the review has cast light on those costs, either apart from or including the Defence Estates part of them, and will the money freed be used for the investment that must be needed if the new proposition is to be achieved?

Bob Ainsworth: The review team looked at the National Audit Office findings, and there is comment on that. Of course there is potential in some areas to make savings, if not on the properties themselves, then on the overheads for things that are under-utilised. However, there is a need for investment, so we have to try to see to it that the reconfiguration gets due priority in our planning rounds in future. We also have to see to it that reserves get the funds that they need, so that they can have the estate that they need, so that they can get the training that they need to be effective.

Peter Viggers: Is the Minister aware that his statement this afternoon was deeply unreassuring? I fear for the future of General Cottam's careful report. The Minister made many references to using reserves to fill gaps in the armed forces; he made no reference at all to formed units, which are absolutely essential if we are to continue to develop leadership and have the structure around which our armed forces can be re-expanded in times of emergency. History has shown that we need that insurance policy. Not to insure is a false economy.

Bob Ainsworth: The hon. Gentleman might remember that I said to the House that we would reconfigure training so that people would be able to train as a unit within six months. He now tells me that I did not mention units at all.

David Kidney: I echo my right hon. Friend's praise for our remarkable reservists and the employers who support them, and echo what I thought sounded like an expression of regret for the loss of TA numbers in Signals. May I ask him to say a little about his ambition to improve training, which he mentioned in his statement, with regard to the times and places of training and, where appropriate, the engagement of reservists' employers in planning it?

Bob Ainsworth: Throughout the review, training plays a central role. Providing training that is better placed geographically; integrating training with regular training, where appropriate, so that reserves can train alongside regulars; and reservist units and sub-units being able to use regular training capacity and facilities, and take up that capacity effectively, are all issues covered by the review. One of the things that we will need to talk to employers and reservists about is our growing need to try to attract people into the reserves to provide niche capabilities. Generally speaking, people want to go into the reserves to do something different; they do not want to do what they do in their day job. In stabilisation operations, we will sometimes need them to do what they have an expertise in. They and their employers will need to be consulted about that.

Mark Lancaster: I remind the House of my interest, which is in the Register of Members' Interests.
	The reduction of the TA estate is a mistake, and I fear that the driver is financial. In 2002, I took command of a bomb disposal squadron that had recently been amalgamated with another squadron. The assumption was that the personnel from the closed TA centre would commute to the new TA centre. That never happened, and the new unit was immediately under-strength. Given that the Minister has repeatedly reassured the all-party group on reserve forces that cost was not the driver for the review, will he simply confirm to the House that the £75 million that will be saved, as a result of selling off that estate, will be reinvested in the TA, not the regular Army?

Bob Ainsworth: The review was not cost-led, and I have repeatedly told the all-party group that. The review could not and did not seek to protect the reserves entirely from the pressures on the rest of defence. The proposals that came forward from the planning round were not of General Cottam's making, and not of the reserves' making. It would have been wrong to say, "Because we have a strategic review, we're going to ring-fence the reserves, and they will not bear any of the pressure for change within the rest of defence."

Michael Penning: The TA, alongside which I had the pleasure of serving as a regular soldier, will regard the statement as an insult—not the review, but the statement—because of its complete lack of content. The Minister could not bear to say that 2,000 soldiers—it will be over 2,000 soldiers—will be cut from the British Army. That was not in his paperwork. The way forward is to have a review about how we will keep those soldiers in the TA. That should have been done before the cuts were announced today.

Bob Ainsworth: If the hon. Gentleman is suggesting that it is good practice that individuals or the TA would want to maintain capability that is no longer required, I disagree, and I think that every sensible individual listening to him would disagree too.

Ann Winterton: May I just ask the Minister whether he has ever heard of retraining? If people are in the TA, we should keep them in the TA, not cut the numbers, because at the moment we desperately need them. However, may I ask him whether it is possible to calculate in the review the exact number of volunteer reserve mobilisations in any one year, because we cannot do so currently? Will he bear in mind, while praising the reservists for all that they do, that they can choose whether or not they go on a deployment, but regulars cannot do so? It is important that the relationship between the regular Army and the reservists is kept on an even keel.

Bob Ainsworth: I have said it before, and I will say it again: where we can keep those individuals who are affected by the proposals on the Signals Regiments in the TA and offer them other opportunities, we will do so. That applies to all of them, so the point that the hon. Lady makes has been taken on board. I do not think that we should discard those individuals in any way. Some of them may choose not to do other jobs—that is a matter for them—but we will do everything that we can to keep them.
	Regarding mobilisation and the way in which we mobilise, the hon. Lady will see that there are proposals for changes in mobilisation in the reserves, and she will want to look at them.

Points of Order

Charles Walker: On a point of order, Mr. Speaker. Please, please, may we have a statement on sixth-form funding? Many Members have expressed concern, both before and after the Easter recess, but we have not yet had a statement from the relevant Minister. Would you use your offices, Mr. Speaker, to bring the Secretary of State to the House?

Mr. Speaker: The appropriate Minister will have heard the hon. Gentleman's concerns.

Bob Spink: On a point of order, Mr. Speaker. You have often dealt with points of order from Conservative MPs complaining that other MPs visited their constituencies without giving them proper notice. The hon. Member for Wimbledon (Stephen Hammond) visited my constituency last week, but I learned about it from my local  Echo, receiving notice from the hon. Gentleman only today. This is the third time that Conservative MPs have visited my constituency in recent months to electioneer without giving me proper notice. Perhaps all hon. Members ought to practise what they preach.

Mr. Speaker: I have to be careful, but I shall make it quite clear for the record that if a Member of Parliament goes to a private constituency meeting—in another life, I used to be in the Labour party, so I know about these things—there is no need to notify the local MP. As for any public engagement—and I appeal to all Members of Parliament, as they have enough to do in their own constituencies without worrying about others—if Members believe that they have to go into another Member's constituency, proper notice is important. I do not expect an e-mail on the day of the visit—proper courtesy is all that we ask for. I appeal to Members, so that I am not brought into this argument.

Tobias Ellwood: On a point of order, Mr. Speaker. May I echo the request from my hon. Friend the Member for Broxbourne (Mr. Walker) for clarity regarding the Learning and Skills Council? I have three schools that are confused about the situation, and that will continue until a Minister comes to the House to tell us exactly what is happening regarding the funding shortfalls that our schools do not deserve.

Mr. Speaker: Further to what I said to the hon. Member for Broxbourne (Mr. Walker), the matter will appear in  Hansard and the Minister will have heard. Hon. Members can ask for an Adjournment debate in Westminster Hall, which can give them an hour and a half in some cases, or half an hour here on the Floor of the House, where I usually chair proceedings and enjoy very much the contributions that hon. Members make.

Protection of Children (Publicity)

Motion for leave to introduce a Bill (Standing Order No. 23)

Jacqui Lait: I beg to move,
	That leave be given to bring in a Bill to prevent the exploitation by parents of their children by means of seeking publicity, primarily for the purpose of financial gain, in respect of the actions of such children; and for connected purposes.
	It would be a rare adult who was not appalled to discover that a mother could plot with other members of her extended family to kidnap her daughter for financial gain, and I, for one, was relieved that the plot was discovered and the mother and her accomplice jailed. Not much later, the story broke of the alleged 13-year-old father, and we had to endure the spectacle of him, the baby, the mother and other claimants to fatherhood all over the world's media.
	I ought to declare an interest as my husband is leader of East Sussex county council, which was involved in that case. Senior officers in the council have done much devilling work for me and I am grateful to them for their help and advice, as I am to the Clerks and the Library of the House. I am also grateful to my hon. Friends the Members for Eastbourne (Mr. Waterson) and for Wealden (Charles Hendry), among others, for sponsoring the Bill, and I hope they do not think I am treading on their toes. I regard this as potentially a nationwide issue.
	I also alerted the Under-Secretary of State for Justice, the hon. Member for Dewsbury (Mr. Malik) to the fact that I was planning this Bill. I quite understand that, as a Minister in the Ministry of Justice, he cannot be involved, but I hope he hears my argument and acts on it. I am also hugely grateful to the Centre for Social Justice for its analytical work, which has opened up the whole debate on the impact of family breakdown on society
	Those two cases had in common the misguided desire of a self-interested adult member of a dysfunctional family to profit by exposing their child to a media storm. I shall not refer any more to the details of those cases as those involved have had the protection of the law to regain their anonymity. What alarmed me about them was the damage that would inevitably be caused to the youngsters who were exposed to the full glare of publicity.
	I want to emphasise that this is not a routine attack on the media. I used to be in that business, and when I was I would have given my eye teeth to be in on such a story. Luckily, however, I have not had to face the media pack in full cry and I hope I never have to, but I have heard about the horrors of it from adults who have had to endure it, whether for good or for bad reasons. For vulnerable children to be exposed to it is appalling. To have lots of strangers doorstepping them, asking for comments and interviews, shouting at them, having flashing cameras pointed at them and being followed by the press pack must have been a nightmare, and I commend the relevant authorities for acting as quickly as they could within the ponderous processes of the law to protect the youngsters in a way that any normal person would expect the parents to do.
	What concerns me more than anything else is that the parents could even dream that they could make money from their own vulnerable children. This is a new extension of the many abuses that children have suffered over the years and which we have tried to address. We have spent many hours in the House and much printers' ink in trying to come up with foolproof systems of protection for children from physical abuse, and I am fairly certain that we have not succeeded yet.
	Such abuse by the media is an extension of the abuses to which children are already subjected. I do not want to see other adults thinking that there may be some financial gain to be had by doing this. I want to stop a terrible trend of abuse that could be emerging, and I want to stop it before it can take hold. In this simple Bill, therefore, I want to put in place a measure of protection for any other children who may become the victims of their parents.
	We all know of dysfunctional families from our constituency casework. I doubt that there is a single Member who has not met in their constituency large, extended and informal families: some work as families, many do not. We are probably all aware of the impact on families of lack of work and benefit dependency, debt and financial challenges, drug or alcohol addiction, mental health problems, poor neighbourhoods and poor parenting skills. I have not designed the Bill to sort out those fundamental problems; that will take a Parliament of legislation and work on the ground across many years and many generations. It is not a Bill to control the media, and I do not want it to stop child prodigies and their parents benefiting from their achievements in music, maths, dance, sport or whatever they excel at—good luck to them. We will need them to do well in the Olympics and to get us out of our current economic mess.
	My Bill simply puts back on parents the responsibility not to exploit their vulnerable children by amending the Children and Young Persons Act 1933, so that anybody who has responsibility for any child or young person and causes the publication of any information in respect of the child, including photographs or digital images, that is likely to cause significant harm to the child should be guilty of an offence and liable on summary conviction to a fine and/or imprisonment of up to two years. I define a child or young person as someone under 18 years old. I also include in significant harm both physical and psychological harm.
	We protect our children in the family courts from publicity, notwithstanding the changes that were brought in yesterday. We also protect those involved in the youth justice system, however horrible the crime they may have committed. Most young people in trying circumstances are already protected from media exposure, and none of us probably expected or envisaged that this horrible loophole would emerge, whereby parents intentionally try to make money out of their children in ways that would harm them. I doubt that in 1933, when the Act to protect young people was drawn up, anybody thought that we would need to extend it to stop parents exploiting and abusing their children for the money that they could make from publicity. It is a sad indictment of our society that, some 70 years later, we need to introduce such an amendment.
	It is our responsibility as legislators to ensure that our young children are able to grow up as normally as possible, but that, as we all know, is quite a stretch, given the record of family breakdown and dysfunctionality throughout the UK. The wider challenge is to help to heal those wounds, but that is well beyond the scope of the Bill. This is a small Bill; it is a one-paragraph Bill, but it could prevent more abuse of young and vulnerable children by their parents. I commend it to the House.
	 Question put and agreed to.
	 Ordered,
	That Mrs. Jacqui Lait, Charles Hendry, Mr. Nigel Waterson, Mr. Iain Duncan Smith, Mrs. Maria Miller and Tim Loughton present the Bill.
	Mrs. Jacqui Lait accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 26 June and to be printed (Bill 88).

Ways and Means
	 — 
	Budget Resolutions and Economic Situation

AMENDMENT OF THE LAW

Debate resumed (Order, 22 April).
	 Question again proposed,
	That,—
	(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
	(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
	(a) for zero-rating or exempting a supply, acquisition or importation,
	(b) for refunding an amount of tax,
	(c) for any relief, other than a relief that—
	(i) so far as it is applicable to goods, applies to goods of every description, and
	(ii) so far as it is applicable to services, applies to services of every
	description.

James Purnell: This debate should not be about statistics; it should be about people. I am sure that statistics will be bandied around, but we are talking about real people who are worried if they have lost their job and worried about how to support their children, and workers worrying if they might be next. The welfare state is here precisely to support people at times such as this. We have strengthened the safety net so that we pay people's mortgages if they cannot get back into work, we pay their pensions if their company goes bust and—thanks to tax credits, which the Conservatives have said they want to dismantle—we are paying more than 300,000 people an extra £35 a week to soften the blow of losing overtime or work.

Philip Hammond: For the record, perhaps the Secretary of State will acknowledge that we have said no such thing: we have said that we would like to make the tax credits system work more effectively.

James Purnell: The hon. Gentleman's leader told GMTV that he wanted to dismantle it, and the hon. Gentleman has made it absolutely clear that his party wants to look at cutting tax credits. The fact that 300,000 people are getting an extra £35 a week is softening the blow, and that would not happen under the Conservatives.
	At times like this, the overriding role of the welfare state is to help people to find a job. The choice before us is between a Government who are investing £5 billion extra to get people back in to work and an Opposition who cannot say that they support that help, because they are committed to cutting spending now. I predict that they will want to run away from that during the debate, but that is the consequence of their policy, and they cannot run away from it.

Tobias Ellwood: I wonder if I could quote my hon. Friend the Member for New Forest, West (Mr. Swayne), who intervened early in yesterday's debate to say:
	"Is this really what this day's debate is about—the Opposition? Is it not extraordinary that the Government begin with an attack on the Opposition rather than with an exposition of their own case?"—[ Official Report, 27 April 2009; Vol. 491, c. 595.]
	I repeat that today: why do we not stick to the Government's plans? In the interests of scrutiny, let us hear them.

James Purnell: There is someone else who wants to run away from the consequences of his party's policy.  [ Interruption ] The Opposition do not want to listen to the debate. They do not want to have the consequences of their policy spelled out to them, because they want to pretend that it is possible to cut spending now and increase spending at the same time. During this debate we will expose why that is simply not possible.
	These are extraordinary times.

Steve Webb: Will the Secretary of State give way?

James Purnell: I will make a little progress and then give way.
	Unemployment has been rising across the industrialised world—in the United States, France, Canada, Japan and Italy. In Spain, it is over 15 per cent. Everyone in this House will be worried about the rise in unemployment to 6.7 per cent. in this country. Yes, of course, we started from the lowest claimant count since 1975; yes, there are still nearly 3 million more people in work than in 1997. However, that is no comfort to people who have lost their jobs—they want to know what Government will do to help them now.

Frank Field: Will the Secretary of State give way?

James Purnell: I give way first to the hon. Member for Northavon (Steve Webb).

Steve Webb: When the Chancellor said that there would be an extra £20 on tax credits, some people might have thought that he meant £20 a week. Will the Secretary of State confirm that he meant £20 a year, which is about 40p a week—barely a pint of milk? He looks confused, but that is the figure that the Chancellor cited in the Budget statement. Does he think that that is sufficient for the Government to hit their child poverty target for 2010?

James Purnell: I am not even sure that the hon. Gentleman's party is committed to that target. We are committed to abolishing child poverty. Clearly, these are extraordinary times. However, we took decisions in the 2007 Budget that will take another 500,000 children out of poverty, and we have already taken 600,000 children out of poverty on top of that. If we had just continued the Conservative party's policies, 2 million more children would be in poverty. We continue to be committed to this policy, which would never have existed if the Conservatives had been in power.

Frank Field: rose—

James Purnell: I will make some progress with my argument and then give way to my right hon. Friend.
	Labour's policy is to invest now to protect jobs now and to get people back into work as quickly as possible. We estimate that because of our actions half a million jobs will be protected. People who would otherwise be out of work are still in work because of our actions. In contrast, the answer of the right hon. Member for Maidenhead (Mrs. May) would be to cut spending now, and that would mean helping the unemployed less. That is the choice—a Labour Government who believe that we are in this together and will only come out of it together, or Opposition Members, who believe that someone who loses their job is on their own and should not be helped by the Government of the day.

Frank Field: Some of my constituents have asked me to put this question to the Secretary of State this afternoon. They do not doubt that the Government's measures are about helping people to get back to work, but those measures do not wash with them, because work is part of their DNA. They are scrambling for any job that they can get, but there are now simply not enough jobs for those who genuinely want to work. Their wives work a small amount, and they are now faced with their national insurance-based jobseeker's allowance running out. Should they tell their wives not to work, so that they can claim benefits, or should they tell their wives to continue working while they scramble for work, and lose their homes because they simply do not have enough money to pay the mortgage? What advice would the Secretary of State give my constituents?

James Purnell: Clearly, we want to help people get back into work as quickly as possible, and the tax credits policy is intended precisely to help women in that situation so that they can have extra work.  [Interruption.] The hon. Member for Runnymede and Weybridge (Mr. Hammond) mutters from the Opposition Front Bench, but these are exactly the JSA rules that his party introduced in 1996. The difference between now and then is that, on top of that, there are tax credits to help people who want to work more, so I have answered my right hon. Friend's question precisely.

Frank Field: Will the Secretary of State give way again on that point?

James Purnell: I shall make some further progress, as I am going to come to my right hon. Friend's point about real jobs.
	The Opposition's policy would increase the human costs of this recession, but it is also economically illiterate. In a banking crisis, we have to get lending going again, support the banks and strengthen confidence. The Tories, of course, would do the opposite. They would take money out of the economy at precisely the time when it needs to be in the economy. They would cut borrowing and would therefore be unable to stand behind the banks, savers, businesses and homeowners in the way we are. Their policy would risk the vicious spiral that the Japanese economy entered in the 1990s. That would be the consequence of their policy, and they cannot run away from it.

Judy Mallaber: Unfortunately we have lost some jobs in my constituency, including in one business that we were able to help with the banking problems. Does my right hon. Friend agree with what was said in the discussion that I had with my local jobcentre manager last week—that, unlike in the previous recession, we now have an active labour market intervention strategy? Will he accept my thanks that there is now a much broader suite of measures that can be used to try to help people who do not have a job to get back into employment? For example, they can be helped to go into business for themselves, look for other employment or enhance their skills. Does he accept that that strategy is very different from what happened in the previous recession?

James Purnell: That is absolutely right. I am sure that my hon. Friend will accept that that costs money, and it was precisely because the Conservative party did not put in extra money in the '80s that the active labour market was relaxed. The link between claiming and looking for work was eventually completely abandoned, and studies suggest that that meant that unemployment was 4 per cent. higher than it needed to be. That is the consequence of the Opposition's policy, and they cannot run away from it. They are ideologically against the extra spending, so unemployment and the recession would last longer and cost more, precisely as they did in the past.

Several hon. Members: rose —

James Purnell: I will make some progress, then I will give way to hon. Members.
	What is really extraordinary about the Opposition's policy is that they want to spend less on helping the unemployed. They must be the first Opposition to say at a time of rising unemployment that the Government should be spending less, not more. Of course, it is reasonable for the Opposition to say, as they did at the weekend, that they want to spend less. That is a reasonable policy, but they cannot in the next breath say that they want to spend more. They cannot say in the run-up to the Budget that we should be cutting spending, and then when the Government announce extra money for the unemployed say, "Oh, well, we'd have done that too." It simply does not add up.
	We have set out our position on spending clearly in this Budget, and we have been clear about the consequences of our decisions and of asking those who earn more to pay more. The Opposition have made their overall position clear. They would not support the £5 billion that we have invested in unemployed people, and they have said that they want spending restraint now. But they have yet to admit the consequences of that choice, so I shall spell it out for them. We are investing around £3 billion extra in Jobcentre Plus and our private and voluntary providers. That was our choice. The right hon. Lady's choice to oppose that would mean people getting less help to find a job, less time with job advisers and less help with job search.

Theresa May: rose—

James Purnell: The right hon. Lady is about to tell us where the cuts would fall under her leadership.

Theresa May: The right hon. Gentleman seems to pursue the argument that, when people say that they want public sector spending to be restrained, it means cuts. The Government will restrain public sector spending by billions of pounds next year. Where will the Government's cuts fall?

James Purnell: The problem with the right hon. Lady's argument is that she opposes even the efficiency savings that we have made in the past few years. We have saved £2 billion a year through extra efficiency savings.  [Interruption.] The hon. Member for New Forest, West (Mr. Swayne), who is the Leader of the Opposition's helper, may be interested to know that the right hon. Lady goes from television centre to television centre, opposing our changes. She cannot say that she opposes the efficiency savings that we have made in the past few years and criticise us for that, while claiming that she will find more efficiency savings in future. The shadow Chief Secretary may be interested to know, for the right hon. Lady's job prospects, that she has got herself into a position whereby she was against efficiency savings in the past, saying that she would not preside over any in the future, but she still believes that she can spend more money than us. She may have noticed that the leader of her party said at the weekend that he wanted people who would find less money and achieve more. She proposes to spend more money and do less.
	The right hon. Lady asked where our cuts were. We set out in our three-year plan last year exactly how we achieved the £2 billion of efficiency savings and we will set out in our three-year plan in the next couple of weeks exactly how we will continue to do that. We will continue to save on IT, telephony and estates. We have reduced jobs in back offices and put them in the front line, where they are most needed. The right hon. Lady opposed all those changes, which shows that the Conservatives want to talk generally about saving but have no idea about how to achieve it.  [Interruption.] I think that the hon. Member for Runnymede and Weybridge is twitching.

Philip Hammond: Let me get this straight to make sure that I have understood the Secretary of State's argument. When the Labour party makes cuts, they are efficiency savings; when the Conservative party proposes the same reductions, they are front-line service cuts. Is that his argument?

James Purnell: That is exactly what has happened in my Department—we have reduced back-office jobs by 30,000 to 100,000. The right hon. Member for Maidenhead opposed that because she wants to present easy arguments about— [Interruption.] She says no. She goes around talking about 750 jobcentre closures. That was a result of putting together the Employment Service and the Benefits Agency, thereby improving the service, reducing the time that we take to process benefits and improving the advice that we give people to get them back into work. They now get back into work far quicker than in the past, yet the right hon. Lady opposed that. Conservative Members have no idea how to make the system more efficient—they are simply ideologically committed to cutting spending.

William Cash: rose—

James Purnell: Right on cue. I will give way to the hon. Gentleman.

William Cash: The Secretary of State speaks continuously about cuts and confidence, but I want to ask him about his responsibilities for employment. The figures for public sector debt, on which the Government rely, are not, in every respect, those that the Office for National Statistics presented. Does he agree that, according to ONS figures, including the banking sector and public sector pensions, the actual amount of net debt is more than £3 trillion, not the amount of around £1 trillion that the Government presented? On ONS figures, that is between 175 and 205 per cent. of gross domestic product. Does he agree that the ONS says that—yes or no?

James Purnell: Not at all. If the hon. Gentleman wants to discuss debt, the International Monetary Fund says that we are the second lowest for debt in the G7. We will remain in that position even at the top of the amount that we will borrow. No one denies that borrowing needs to rise so that we can invest more now. That is precisely to ensure that we return to growth and reduce debt as quickly as possible. The problem with Conservative Members is that, because they would not take action now, unemployment would last longer and the debt would be higher. They made that mistake in the 1980s and the 1990s, and they still have not learned the lesson. Clearly, they do not want to hear about the consequences of their policies, so I will continue to make them clear.
	Our policy is to recruit an extra 6,000 people. We announced that in the pre-Budget report, and we have done it. Those people would be fired under the right hon. Lady's policy. She could not hire the thousands of additional staff that we will recruit as a consequence of the Budget. Fewer workers threatened with redundancy would get help through the rapid response service. There would be no pre-redundancy service for small and medium-sized companies.

Christopher Fraser: rose—

James Purnell: I will make some progress because Front-Bench Members want me to elucidate our policy.
	In January, we announced £500 million for people who are unemployed for six months to provide recruitment subsidies and help with starting a company or with training. The new help started this month, on time, exactly as promised. Again, the right hon. Lady could never promise to do that, because she was against the fiscal stimulus in the Budget. More than 6,000 people have already been referred to that help. She criticises us for not doing that quickly enough; under her it would not happen at all.
	The right hon. Lady goes around talking about the flexible new deal. The Budget means that we can invest hundreds of millions of pounds extra to secure the flexible new deal. We will deliver that— [ Interruption. ] It has gone up because, owing to the world recession, we predict that there will be an increase in numbers. She, I am sure, agrees with that. We are putting more money in; she would not do that. If she were now Secretary of State, which would be a terrible thing, she would have— [ Interruption. ] We announced an increase in the Budget in my Department—one that, because of the policy of the hon. Member for Runnymede and Weybridge, she would not be able to match. She would be sitting there, having to work out either how she would put the flexible new deal back by a year or how she would cancel it. That is the consequence of her policy. Today we are announcing the next stage in that extra help.

Christopher Fraser: Does the right hon. Gentleman accept that as a result of the inability to secure much needed investment many small firms are cutting back on staff, placing even more people in unemployment?

James Purnell: Actually, because of the tax deferral policy that we have put in place, £2 billion has been deferred. That is helping 100,000 companies and more than 600,000 people. Because of the policies that we are putting in place overall, we think that the jobs of 500,000 people are being protected. Because the hon. Gentleman's party is against that extra help, the consequences under his policy would be far worse.  [ Interruption. ] Again and again, the Opposition want to say that they will cut spending, but they do not want to live up to the consequences of that, which would be less help now.
	The next stage of the extra spending is what we have announced today, which is a future jobs fund, which responds to the point that my right hon. Friend the Member for Birkenhead (Mr. Field) made about what we do if there are not enough jobs. What happened in the '80s and '90s when there were not enough jobs for young people was that they were simply abandoned and left on the scrap heap. Many right hon. and hon. Members will have seen the consequences in their constituencies. They will know that often those people never got back into work again and that often their children never got into work when they grew up. That was the root of many of our welfare problems, which we have been starting to put right.

Theresa May: I am grateful to the right hon. Gentleman for his generosity in giving way to me for a second time. He has just been talking about the number of young people who are unemployed. Will he now confirm to the House what the Prime Minister was not willing to confirm in Prime Minister's questions last Wednesday, which is that the number of young people not in education, employment or training is now higher than it was when Labour came into office?

James Purnell: The right hon. Lady knows perfectly well that the number of people overall has increased and the rate is actually down. She knows perfectly well that there has been an increase in the number— [ Interruption. ] Will she confirm that she knows that there has been an increase— [ Interruption. ] No, this is a debate that— [ Interruption. ] She knows perfectly well that the rate is down: it is because there are more 16, 17, 18 and 19-year-olds that that fact gets bandied about. What people actually care about is what we do about that. What we are doing about it, through the policy that we announced in the Budget, is saying that every young person aged 18 to 24 will be offered a job or a training place. That means that the problem that she has identified is being dealt with. We will put in place a guarantee that every young person will be offered a job or a training place. She cannot match that, and if she wants to say that she will, she should say how she would fund it.

Theresa May: I am grateful to the Secretary of State for again giving way. I am going to try again. I asked a very simple question, which he did not answer: will he confirm to the House that the number of young people not in education, employment or training is now higher than it was when Labour came into office?

James Purnell: The rate is down and there are more people in full-time education than there were at the time. Because of the policy that we are putting in place today, all young people will be offered a guaranteed job or a training place before they are unemployed for a year, instead of being put on the scrap heap, as they were in the '80s and '90s.

Philip Hammond: As the Secretary of State insists on talking about rates rather than numbers, will he confirm that in 2000 the rate of NEETs was one in eight and that it is now one in seven? That is a rate, not a number.

James Purnell: Because of the policy that we are putting in place, 18 to 24-year-olds will be guaranteed a job or a training place.

Frank Field: Labour Members are delighted with the Government's proposal to provide jobs. More is the pity that my right hon. Friend was not old enough to be Secretary of State in 1997, so that we could have that programme at the beginning of our stewardship, instead of all this new deal stuff. Earlier I was trying to address the problem of older workers, who are not covered by the scheme, whose national insurance benefit has run out and who will take any job available. Do the Government have any scheme to extend the national insurance scheme's coverage beyond six months?

James Purnell: As my right hon. Friend knows, those jobseeker's allowance policies have been in place since the 1996 legislation, but we are putting in place policies to help people who are in precisely the circumstances that he describes. There is a scheme to help with mortgages, whereby people can defer some of their mortgage payments. That would help people in those circumstances, as would the tax credits policy. It is right that there should be a contributory element, and that people should then get help, whatever the income in their family. After a period, however, it is also right that we should look at the income in that family overall. Anyone wishing to suggest an alternative policy would have to say how they would fund it.

Jacqui Lait: Can the Secretary of State tell me what the Government are going to do about the 16 to 18-year-olds whose education has been cut, if he is not prepared to make a statement about the failure of the Learning and Skills Council to fund sixth-form education?

James Purnell: We actually announced £600 million extra in the Budget—again, money that the hon. Lady's party would not be able to provide. The shadow Chief Secretary to the Treasury will note yet another spending demand from those on his Back Benches.

Jacqui Lait: rose—

Anne Main: rose—

James Purnell: I want to make some progress on elucidating the policy that the Conservatives do not want to listen to—

Jacqui Lait: On a point of order, Mr. Deputy Speaker. I seem to remember, having sat through the Budget statement, that the £600 million fund to which the Secretary of State has referred was actually intended to replace the capital fund and not for sixth-form education. Perhaps you would like to invite the Secretary of State to correct himself?

Mr. Deputy Speaker: The hon. Lady is a wise Member of the House, and she knows that that is not a point of order. It is a matter of debate, and it remains to be seen whether the Secretary of State will take up the point; it is not a point of order for the Chair.

James Purnell: The hon. Lady is wrong; it is revenue funding for extra places. I am afraid that she is the one who is confused.
	We will offer young people 100,000 jobs in growing sectors of the economy. In addition, we will launch the future jobs fund, which will spend £l billion to create real jobs, paid at least at the minimum wage, which will lead to qualifications and careers. From this morning, the fund has been open for business. We want councils, social enterprises and charities to come forward with their ideas. There are two main criteria: the jobs have to be real jobs, and they have to be socially useful.
	Today, my right hon. Friend the Secretary of State for Culture, Media and Sport and I announced that at least 5,000 of those jobs would be sports coaches. That meets the criteria: they are socially useful jobs and they are also real jobs. We expect that many of those young people will then go on to a career in sport. The others will learn good, useful leadership skills that they will be able to take into whatever career they go into. All those people will be better off than if they had been left without work or training, as they were in the past.
	Those on the Conservative Front Bench do not want to welcome this policy, because to do so would be to recognise that their policy would involve doing less than the Government are doing. But perhaps they would like to take advice from the Conservative chair of the Local Government Association, who said that that fund was "excellent news". She continued, and I could not have put this better myself— [ Interruption. ] The shadow Chief Secretary might want to listen to the advice from the Conservative chair of the LGA. She said:
	"Previous recessions have left tens of thousands of people unemployed for years, even decades, and stuck in a dependency culture without the skills that they need to get a job. The devastating impact of this lost generation"—
	the Conservative lost generation—
	"from previous recessions is still being felt in many parts of the UK today".
	I could not have put that better myself, and I believe that that, rather than the view expressed by those on the Conservative Front Bench, is the proper view in the country. It is a shame that, on the same day, the right hon. Member for Maidenhead described the jobs fund as a con. Despite the lack of enthusiasm from some quarters, I hope that MPs on both sides of the House and councillors will lead their local communities and apply through the documents that we have put on the Department for Work and Pensions website today.
	There is a choice: stopping long-term youth unemployment, or cutting spending now. We are investing to prevent today's unemployment from turning into tomorrow's welfare dependency. The Opposition would simply abandon people to a life on benefits. In the 1980s Tory recession, the number of young people unemployed for more than six months went from 150,000 to 600,000, and it took 10 years to return to the pre-recession level. In the 1990s, it rose to more than 400,000 and took seven years to fall back. The costs were enormous: the cost to the economy and the taxpayer of the benefits bill, and the cost to society of drug abuse and crime. Yet, we know that the true cost was in the wasted potential of talented young people—the Conservative party threw them on the scrap heap—and that the consequences of making the wrong decisions in a recession are not theoretical. We remember—Labour Members certainly do—that the consequences were felt by real people, and the challenge for this recession is in ensuring that we do not repeat the mistakes that the Conservatives made in the past.

David Anderson: The hon. Member for Broxbourne (Mr. Walker) asks, from a sedentary position, who writes this stuff. I do not know who wrote it, but people such as me lived through it.

James Purnell: It was because of the decisions of the party of the hon. Member for Broxbourne (Mr. Walker) that far more people were put out of work than ever needed to be—I shall give way to him.

Charles Walker: This is absolute rubbish. I know that Damian McBride has left No. 10, but please could it get a new speechwriter so that it does not waste everyone's time with this utter drivel?

James Purnell: Again, the hon. Gentleman does not want to hear the consequences of his policy, and that is not surprising. He wants to pretend that it is possible to cut spending now and not have less to spend on helping unemployed people now.  [Interruption.] It is not rubbish; it is exactly what happened in the 1980s and in the 1990s, and it would happen again if his party ever got back into power.  [Interruption.]

Anne Main: rose—

Mr. Deputy Speaker: Order. Sedentary barracking is not helping this debate—it has enough in it without having a chorus of interruptions and so on. I am not sure whether the Secretary of State was giving way to the hon. Lady—

James Purnell: indicated dissent.

Mr. Deputy Speaker: He is not. I call Mr. James Purnell.

James Purnell: I wish to get on with my speech, because I know that a lot of people want to get in. The criteria on which we will be judged in this recession are very clear. We cannot be immune from the world economy, which is forecast to shrink this year, for the first time since the second world war.

Anne Main: rose—

James Purnell: I have said that I will not give way to the hon. Lady, so perhaps she will let me make progress.
	We can and must aim to do better than in previous recessions, and that is why this extra money is so important. As a result of this extra money, we will be able to pay benefits on time; even though more people will be claiming, we aim to reduce the amount of time taken compared with previous years and to meet our target this year. The right hon. Member for Maidenhead would not be able to make that promise.
	Because we have reformed Jobcentre Plus we have almost halved the average time that it takes people to get back into work compared with previous recessions, because of this money we can aim to continue to do better than in previous recessions, and because of the way that we have reformed the welfare state we are not seeing the big increases in the numbers claiming other benefits, as happened in the past.

Theresa May: I am grateful, once again, for the Secretary of State's generosity in giving way to me. Perhaps he could explain why, if he has done so much to reform welfare and if he is so concerned about the impact that being out of work has on people's quality of life, we went into this recession with getting on for 5 million people on out-of-work benefits.

James Purnell: Actually, our figure was right at the bottom of the international scale; it was lower than that of the United States. The level of people on disability benefits and unemployment benefits in this country is lower than international levels. Of course we want to do more to reduce that level, and we have a policy precisely to do that—a policy that the right hon. Lady's new colleague, David Freud, said was remarkable. I am sure that she shares the view that our record is remarkable.  [Interruption.] She will know that people who were around in the 1990s remember that people were told to go on to incapacity benefit; the numbers were massaged and all the Conservatives cared about was getting the numbers on the unemployment register down. The problem was that when people were put on IB they were never offered any help to get off it, and that is exactly why the number of people on IB trebled under her Government.
	We cannot be immune from what is happening, but we can aim to do better than in previous recessions, and we will aim to do so on three key tests: maintaining the active labour market regime and paying people's benefits on time; getting people back into work more quickly than in the past; and ensuring that there are not the sharp increases in the number claiming inactive benefits that happened in the past.

Steve Webb: The Secretary of State rightly points out the waste when young people become long-term unemployed. Acting after a year is clearly better than nothing, but does he accept that for a 19-year-old a year is an eternity? Is it not apparent on day one of unemployment who are the groups with a high risk of not getting back to work quickly? Could there not be targeted intervention on day one, for example, to help young people who have no skills or poor literacy, rather than a wait of a year?

James Purnell: I am grateful for the hon. Gentleman's question because it gives me the chance to put right a misunderstanding. We do not wait for a year; we give help to people even when the redundancy is announced. We give them help from day one. We do exactly what he says: we fast-track people on to the flexible new deal, and then at six months we provide the extra support by giving people help to set up a company or providing the golden hello of up to £2,500. The extra guarantee is that we will say to everybody that within a year they will be offered a job or a training place. Already, more than 80 per cent. of people get back into work within a year, but this is a new guarantee that everybody will be offered a job or a training place— [ Interruption. ] We are not wasting a year: we offer people help and training from day one. We have access to the advisory discretionary fund from day one, and we help them with CVs from day one. We refer them to jobs clubs early in their— [ Interruption. ] It does work, because it gets people back into work more quickly than in previous recessions, but in addition we are introducing a guarantee that within a year everybody will be offered a job or training place, and that has been widely welcomed outside the House as well as within it.
	It is extraordinary that the Conservatives still have not said that they would match our spending on unemployment. I paid close attention to the Conservatives' party conference at the weekend and they were able to commit to spending extra money on certain things. They say that they want an age of austerity. It is a strange sort of austerity when they will not commit to spending a single penny more on the unemployed, but will commit to spending billions of pounds on those in jobs earning over £150,000 a year. It is a strange sort of austerity when they cannot commit to help young people at all, but they can promise a tax giveaway of £200,000 to the 3,000 richest estates in the country. The Conservatives' priority is clear—no more money for the unemployed, but £200,000 for the 3,000 richest estates.

Philip Hammond: The Secretary of State cannot defend his policies or his Government's record, so he is making up some policies, attributing them to us and then attacking them. I do not recognise the statement that he has just made about people on incomes of more than £150,000 a year. We have explicitly said that while we think that the Government's proposals will be damaging to the economy we cannot make any commitment to rolling them back. So what is he talking about?

James Purnell: The hon. Gentleman's leader said that it was in the queue to be reversed. The only commitment that we know will be in the Conservatives' manifesto is the cut in inheritance tax for the 3,000 richest estates in the country. Again, that is their policy and one that they cannot run away from. That is not an age of austerity: it is just not fair.
	There is a choice between the parties. My party would put more money into helping people who become unemployed to shorten the recession and reduce the cost, but the Conservatives are ideologically opposed to such spending. They would not help people now and that would repeat the mistakes of the past and make the recession longer. That is the choice before the House today.

Theresa May: Before I respond on this issue, I wish to declare to the House that my husband works for an asset management company, part of whose business is the management of pension funds.
	We have just heard an extraordinary speech from the Secretary of State. This is supposed to be a debate about this Government's Budget. Did we hear a detailed defence of the Budget? No. The Secretary of State started by saying that he did not want this debate to be about statistics. Well, we all know why he did not want it to be about statistics. The statistics in the Budget make very bad reading for Labour Members. He then created some fantasy statistics, which he claimed to be Conservative party policy. In fact, he spent virtually all his speech talking about what he claimed was Conservative party policy rather than defending the Budget.
	Let us be clear: last week the Chancellor of the Exchequer delivered Britain's bad news budget. We face the worst recession since the second world war. Unemployment is rising at the fastest rate ever and, thanks to Labour's economic incompetence, our national debt will double again to £1.4 trillion, which means that every child born in Britain today will face a debt of £22,500. At the same time, that child's parents will be struggling to cope with the hidden tax hikes that will cost every family more than £1,400 but were not even announced in the Budget.
	In the next two years, this Labour Government will borrow more than all previous Governments in history put together. That is only according to the Chancellor's own figures. Of course, as we know, within a matter of hours after the Chancellor's Budget his forecasts were shown to be a fantasy. That means that the reality for families in this country could end up being far worse. Over-optimistic forecasts by the Treasury mean that Labour's debt mountain could grow even higher.
	The gross domestic product figures for the first quarter of 2009 have already proved the Chancellor wrong. The economy shrank by 1.9 per cent., which was worse than predicted by the Chancellor in his Budget. Instead of standing up and taking responsibility for the mess that Labour has put this country into, the Chancellor and the Secretary of State, today, have been giving us fantasy figures, refusing to recognise the Government's responsibility for the state of the economy and failing to come up with any credible answers about what needs to be done to fix our broken economy.
	We were in a similar position six months ago, last November, when the Chancellor gave his pre-Budget report. Back then, he said that the economy would shrink by 1.5 per cent. in 2009. The Budget prediction is now a 3.5 per cent. fall. Less than an hour after the Chancellor sat down from his Budget, the IMF forecast that growth would fall by 4.1 per cent. If the Government cannot face up to the true nature of the problems that we face, there is no way that they can draw up a credible plan for recovery.
	Let us take as an example the handling of the unemployment crisis, about which the Secretary of State has boasted so much this afternoon. The pre-Budget report predicted that the unemployment claimant count would reach 1.41 million by the end of 2009. Last week's unemployment figures showed that the claimant count had already passed the Chancellor's prediction. It was higher in March than the Chancellor predicted that it would be in December.
	The new predictions in last week's Budget paint an even more worrying picture. Claimant unemployment will pass 2 million by the end of this year and reach 2.44 million by the end of 2010, 1 million higher than the Government predicted six months ago. On current figures, that means that the Government are now predicting that unemployment will rise to more than 3 million. Sadly, it is the unemployed who will pay the price for Labour's failure to face up to reality.
	I consider it welcome that extra support is being given for the unemployed in the Budget and the Red Book, but, unfortunately, because the Government could not be honest about the scale of the problem earlier, many people will have to wait until January to receive that extra help. The Government and the Secretary of State keep using the phrase "Real help now", but "now" is many months away for most people. The help that comes next January will come two years after unemployment first began to rise.

James Purnell: Just to correct the right hon. Lady, it will actually start from the autumn. The guarantee starts from January. This is a massive improvement in policy and it clearly takes a bit of time to put in place. We need to get bids from local councils, but even doing that is quick. The help that we said in the pre-Budget report that we would provide is already here, as is the help that we announced in January. It all came in on time. The right hon. Lady can complain about it not coming in quickly enough—it would not come in at all under her party.

Theresa May: The Secretary of State says that it is all right, because it will take six months, rather than nine months, for help to come in. That is still rather different from saying that there is real help now. Virtually every announcement that the Government have made about the help that they are giving to businesses, home owners and unemployed people has taken months to bring in.
	The Secretary of State made some statements in his speech about our considering the impact that this situation has on people. He is absolutely right. When we are debating in this House, we must never forget that while we might talk about the figures, behind those figures lie shattered lives for many people. It is crueller, however, to say to people that they will get help now and then to delay that help. If the home owner mortgage support scheme had come into place when the Government announced it, 28,000 homes might not have been repossessed. That is the impact on people's lives.
	If the Secretary of State had not been so complacent earlier about rising unemployment, perhaps we would have seen that help coming through earlier. If he had been honest with himself about the level of worklessness, perhaps he would not have had to make plans last November to cut the new deal across half the country this summer. Indeed, if the Government had taken action when unemployment started to rise more than a year ago— [ Interruption. ] I will talk about jobcentres, as the Secretary of State did. The point that I am making, which I shall continue to make, is very simple. The Government continued to close jobcentres when unemployment started to rise. If the Secretary of State had taken action when unemployment started to rise, 54 more jobcentres would be open to help deal with the increased number of benefit claimants who need support and help to get back into work.

James Purnell: The right hon. Lady always gets her facts wrong on this, and she is wrong again. The six-month offer means that people have almost exactly the same help as they have from the new deal for young people already—they are getting that from April. The flexible new deal will be a further improvement for people after one year. The fundamental thing is that the right hon. Lady says she supports that money. Does that mean she is changing her party's position on the fiscal stimulus in the PBR, which the Conservatives opposed? She has a choice: she can either oppose the fiscal stimulus or not have the extra spending. Which is it?

Theresa May: The Secretary of State really needs to stop running with that fantasy story, which cuts no ice with anybody. I notice that he did not actually respond to me on the issue of jobcentres—the point I was making when he intervened. In the House last November, he declared a moratorium on Jobcentre Plus closures, yet instead of that moratorium being effective from last November, three further jobcentres—in Brixton, Orpington and Feltham—have closed. The last of them closed only at the beginning of this month. Members may be interested to know how much unemployment has risen in the areas where those three jobcentres closed this year: 40 per cent. in Streatham in the last year, 70 per cent. in Feltham and 90 per cent. in Orpington.
	In part of his speech, the Secretary of State made quite something of the help that was being given and how people were being helped more quickly by the Government's decisions. In that case, why did more than 35,000 people wait for 17 days or more in December for their claim for jobseeker's allowance—for some money to come through from the Government?

Tom Clarke: In the event of the right hon. Lady's party forming a Government, will she tell the House which of those jobcentres they will reopen?

Theresa May: What I am happy to tell the right hon. Gentleman is that when we come into government, we shall ensure that there is extra money available to help the unemployed, because we shall put through the welfare reform proposals that the Secretary of State has tried to copy but has been extremely timid about. They would mean that money could be used to pay for programmes to get people into work at a rather quicker rate than he would do under his welfare reform proposals.  [ Interruption. ] From a sedentary position, the Secretary of State says, "Oh, well you're going to be spending more." He is well aware that there is a fundamental difference between our welfare reform proposals and his proposals. He does not like to talk about it, which is why I said he was timid: the switch in the DWP budget that enables us to pay for programmes to help get people into work from the benefits that can be saved will be made across the whole country, whereas under his proposals it would be done merely across half the country, which would mean that half the country will not actually benefit from his welfare reform proposals. In one part of his speech, he said that our policies would abandon people to a lifetime on benefits. In that case why has he copied them?

James Purnell: The right hon. Lady is all over the place on this. She knows perfectly well that those were Government proposals that the Conservatives decided to try to copy. She cannot say that she will spend more on welfare reform and more on unemployment and that, magically, the money will somehow come from the City. She may have noticed that it is quite hard to raise money from the City at the moment. It is absolutely impossible for her to say that she will raise welfare— [ Interruption. ] The point is that if we want to save money on the welfare bill, we have to spend more up front. There is no way the right hon. Lady can increase money for welfare reform and for unemployment—it is simply not possible for her to make that promise.

Theresa May: I am beginning to think that I have been sitting through a different debate from the Secretary of State. I do not think the City was mentioned by anybody on the Conservative Benches. Let us get one thing absolutely straight. The Secretary of State said we were talking about his welfare reform proposals that we had copied. I suggest he looks at the 2001 Conservative party manifesto, where he will see that the "Britain Works" section includes precisely that sort of welfare reform proposal. I know the proposals were in that manifesto, because they were my proposals as shadow Secretary of State for Education and Employment at the time. I am only sorry that it has taken the Labour Government so long, despite the best efforts of the right hon. Member for Birkenhead (Mr. Field) in their early days, to accept the need for welfare reform.
	Let me examine in detail the extra help announced in the Budget for the unemployed. There is an additional £1.7 billion to support Jobcentre Plus and the flexible new deal. The Secretary of State did not set this out in great detail in his speech, so when the Chief Secretary winds up the debate, I hope she will tell us how much of that money will go to Jobcentre Plus and how much will be spent on the flexible new deal. Given the figures in the Budget, we conclude that the money will support the increased number of unemployed people, rather than giving extra support to jobseekers.
	There is also a need to look at long-term youth unemployment and those who find themselves unemployed in the early stages of their lives. I welcome the extra support that the Government have put in place, but I feel like I have heard it all before—about 12 years ago, in fact. Labour's 1997 manifesto promised:
	"We will get 250,000 young unemployed off benefit and into work".
	Last Wednesday, the Secretary of State pledged:
	"We will invest £3 billion in more help for jobseekers, including offering long-term unemployed people 250,000 jobs".
	In the Prime Minister's very first Budget as Chancellor he pledged that
	"every young person aged 18 to 25 who is unemployed for more than six months will be offered a first step on the employment ladder."—[ Official Report, 2 July 1997; Vol. 297, c. 308.]
	That offer included the option of subsidised employment or training. Last week, the Chancellor announced:
	"From January, everyone under the age of 25 who has been out of work for 12 months will be offered a job or a place in training."—[ Official Report, 22 April 2009; Vol. 491, c. 241.]
	The big announcement in the Budget actually cut help for the young long-term unemployed by making them wait 12 months for support instead of six.

Yvette Cooper: I want to clarify the right hon. Lady's position. She says that she welcomes the additional funding in the Budget to help the unemployed. Between the pre-Budget report and the Budget, we have been providing an additional £5 billion to support the unemployed, the majority of which comes from additional short-term borrowing to support the economy. Will she confirm that she supports that additional funding, with the additional borrowing, and that, unlike the rest of her Front-Bench colleagues, she therefore supports a fiscal stimulus?

Theresa May: Once again the Government seem to have a fantasy idea of the official Opposition's position on borrowing— [ Interruption. ] Ministers should be patient and wait for the answer. We made it absolutely clear from the beginning of the debate on the recession that automatic stabilisers exist when the economy goes into recession. Of course tax revenues go down and benefit bills go up, and we have never resiled from the fact that that has to be dealt with, so it is quite wrong for the Government to try to claim that we have ever done so.

Yvette Cooper: Let me make it clear that these are not automatic stabilisers. This is additional discretionary investment that is part of our fiscal stimulus to support the economy. Does the right hon. Lady support such additional discretionary funding to help the unemployed?

Theresa May: In an earlier answer to the Secretary of State, I clarified how we will ensure that we can fund our welfare reform proposals. He suggested at one point that our welfare reform proposals were not about unemployed people, but of course they are. The whole point of developing a different welfare reform structure is to give extra help and support to those who are unemployed and to ensure that we do not come out of the recession with more people in long-term unemployment. As the Chief Secretary knows, the questions I was asked were answered by my earlier reference about how we would pay for that.

James Purnell: We are talking about money now. Does the right hon. Lady support the extra spending or the fiscal stimulus? Which one is it?

Theresa May: The Secretary of State is trying to argue that one can have only one or the other. I suggest that he thinks very carefully about what he is saying about the fiscal stimulus and money that might be available for helping the unemployed.

Andrew Love: Will the right hon. Lady give way?

Theresa May: I would like to make a little more progress. The hon. Gentleman may well get in later on, but I have been generous in giving way to Ministers.
	I want in particular to discuss further the impact of the proposals in the so-called "Budget for jobs" on the young long-term unemployed. As I was saying before the exchanges across the Dispatch Boxes, under-25s who were long-term unemployed could previously be helped after six months; that period has now been extended to 12 months. That is not an improvement in the support given.
	There is another problem in the Budget figures. The Red Book makes it absolutely clear that the guaranteed jobs or training will be available to 18 to 24-year-olds who have been on jobseeker's allowance for more than one year. Their number stands at 6,700, out of a claimant count of 1.46 million. In other words, the Government's plans would help less than 1 per cent. of jobseekers. I notice that the Secretary of State is not rising to say that I am wrong about those figures.

James Purnell: rose—

Theresa May: Oh, the right hon. Gentleman wishes to intervene.

James Purnell: I must correct the right hon. Lady. She is completely wrong. We will guarantee the help no matter how much unemployment increases. She fails to understand our policy and is trying to use figures to create a smokescreen to hide the fact that she simply has no policy.  [ Interruption. ]

Theresa May: As my hon. Friend the Member for Forest of Dean (Mr. Harper) points out, the Government cannot make up their mind on whether we have no policies or lots of policies that they do not like. I remind the Secretary of State that one of our policies that he does like is our policy for welfare reform, which he has copied, albeit not to the extent that I would like.
	As the right hon. Gentleman has challenged me on the figure of 6,700, let us look at the position on young long-term unemployed people. According to the Red Book definition, the help is for 18 to 24-year-olds who have been unemployed for a year or more and claiming jobseeker's allowance, of whom there are 6,700. If the Secretary of State is saying that the money is not there to help 6,700, he must be predicting that the number of young long-term unemployed people will increase significantly in the next few months. That is a rather different position from the one taken by the Minister for Employment and Welfare Reform, who gave evidence to the Work and Pensions Committee last December saying that despite the most virulent stories of doom and gloom from some, there were no projections that the pool of longer-term unemployed would grow at the same rate as unemployment.
	For young people, the blow is not just the fact that the help announced in the Budget is not as great as the Government have made it out to be. As was pointed out by my hon. Friends the Members for Broxbourne (Mr. Walker) and for Beckenham (Mrs. Lait), there are also problems with the funding available for further education colleges and sixth-form colleges. The Secretary of State for Innovation, Universities and Skills is doing his best to make the problems worse: as a result of the Government's failure to meet their target on university places, up to an additional 30,000 young people could be turned down for a place.

Anne Main: I thank my right hon. Friend for giving way, especially as the Secretary of State for Work and Pensions did not want to hear my remarks. In response to a question about why post-16 education funding had been cut, the Minister responsible said it was because more people had applied than the Government had budgeted for. He had to admit that they had to pull out the financial rug because they had got their figures wrong, raising expectations that they could not meet or finance.

Theresa May: Absolutely. The way in which the Government have failed to accept the problems that young people are facing as a result of their policies is a betrayal of young people. The issue is not just about further education colleges and university places; between August 2008 and this January, there were 4,000 fewer apprenticeship starts for 18 to 24-year-olds than in the same period in the previous year.  [Interruption.] From a sedentary position, the Secretary of State for Work and Pensions keeps muttering about more spending. I remind him that we are talking about his Government's promises, and his Government's delivery on his Government's policies. There are fewer university places, FE colleges are having their expansion plans cut, and there have been fewer apprenticeship starts. How does that help young people who are looking to make their way in the world?
	Other aspects of the Government's "Budget for jobs" deserve to be looked at in greater detail. On the Government's pledge of 250,000 new jobs, 50,000 of those would come about by providing the social care sector with a £1,500 recruitment subsidy. Hon. Members may feel that that sounds familiar; indeed it does. It sounds rather like the golden hello announced back in January. The difference, of course, is that the golden hello had a £2,500 subsidy for recruitment, so far from the subsidy being better, it has actually been cut.
	I hope that the Chief Secretary to the Treasury will explain in rather more detail how the new proposals for long-term unemployed young people will work in relation to the flexible new deal. What the Secretary of State for Work and Pensions has announced sounds similar to the flexible new deal that will be brought in later this year in parts of the country. We need to know how the programmes will interact. We face the prospect of the Government paying to create jobs, paying to guarantee young people those jobs, and paying welfare-to-work providers to get young people into the jobs that the Government have paid to create and to guarantee for young people. We need to ensure that we do not make the same mistakes that Labour has been making for the past 12 years by throwing money at the issue without giving real thought to how it will help people out there on the ground, and make a difference to their lives.
	I want to mention briefly other aspects of the Budget. Increasing the funds available for the social fund will certainly help people during the recession. I am pleased that that measure has been brought forward, but I note that what the Government give with one hand, they take away with the other: they are raiding £145 million from housing benefit next year. Giving tenants incentives to be more flexible in their choice of accommodation was the whole basis of the local housing allowance. It was intended to promote personal responsibility, but the Government have U-turned on it, and claimants will no longer be able to keep the surplus if the fixed LHA rate is higher than their rent. That means that the impact of the Budget will be to cut money from some of Britain's poorest households.
	The mess in which Labour has left this country means that the Budget was the death knell for Labour's child poverty targets. The Government were told that they needed to invest an extra £4.3 billion in benefits and tax credits if they were to meet their 2010 target. The Budget delivered £120 million. The hon. Member for Northavon (Steve Webb), who speaks for the Liberal Democrats on such issues, has already referred to the point about the cost of a pint of milk. The Child Poverty Action Group made it clear that the impact of the extra support given in the Budget amounts to less than the cost of a pint of milk a week. The Budget still leaves 600,000 children in poverty—600,000 children whom Labour had promised to help.

Steve Webb: Had the right hon. Lady been standing at the Government Dispatch Box, how much would she have allocated to tackling child poverty?

Theresa May: Had we been on the Government Benches, the situation that we would have been dealing with, in relation to the finances of this country, would have been rather different. The reason why the Chancellor of the Exchequer found it so difficult to do anything about the matter when he stood at the Dispatch Box was that 12 years of a Labour Government have led us to the deepest recession since the second world war and to the largest Government borrowing over two years seen in peacetime history. The hon. Member for Northavon should note that what we are talking about is the reason why the Labour Government were unable to provide that help in the Budget.
	I am conscious of the time, but I want to talk briefly about pensioners, because they, too, are potentially hit in the Budget. Pensioners and savers are the innocent victims of the recession. That is why we called on the Government to introduce tax changes that would deliver help and support for basic-rate taxpayers and pensioners. Sadly, however, the Government do not understand the value of saving, as all that they have ever done is spend, spend. The savings ratio has been slashed to almost five times lower than what it was in 1997; more than 12.8 million jobs have no pension provision—800,000 more than last year, and 2.4 million more than 1997. I accept that there were measures such as the increased individual savings account limits and the rise in the capital disregard for pension credit, housing benefit and council tax benefit in the Budget last year, but our proposals for the Budget and the change in savings would have put about £3 billion a year back into the pockets of pensioners and savers. The announcements in the Budget are worth only £90 million a year to savers and pensioners.

Andrew Love: rose—

Theresa May: I promised the hon. Gentleman that I would give way to him.

Andrew Love: Does the right hon. Lady welcome the forecast in the Budget that the savings rate will increase to 5.5 per cent. by 2011?

Theresa May: I would dearly love to be able to welcome a forecast in the Budget, and I dearly hope that the savings ratio will increase. However, at the rate that the Chancellor is going, I do not think that any of the forecasts that he has included in the Budget are to welcomed, because I do not think that we can believe any of them.
	I want to refer briefly to the tax rise on pensions. I am afraid that the Budget was more about politics than about presenting a plan for economic recovery. There is a sense of déjà vu. One of Gordon Brown's first acts as Chancellor was to raid £100 billion from pension funds, and now as Prime Minister, his latest tax hike in relation to the higher-rate relief on pension contributions will take a further £3 billion a year out of pensions. Those changes are not being implemented from 2011, as the Government would have people believe—some new rules on higher-rate tax relief for earnings above £150,000 came into effect the day after the Budget. Not only do they taper higher-rate tax relief for those earning over £150,000 but they tax employer contributions. Savings, of course, will be taxed when people begin to draw their pensions. Those proposals break the basic covenant between savers and the Government, enshrined in the Turner report on pensions, that responsible savers will be rewarded for locking up income in pensions savings for their retirement. Instead of being rewarded, however, they will be taxed several times over. The changes will add more complications to an over-complicated system, too. Any claims that the Government want to simplify pension savings and their administration have been completely undermined by what the Chancellor did in the Budget.
	The Chancellor said that the measure was about fairness, but the money raised in taxes from the pensions of high earners will not go towards improving pensions for those on low incomes. It will simply help to plug the black hole in finances created by Labour. As Dr. Ros Altmann said in her response to the Budget:
	"Instead of encouraging people to save while the economy was doing well, Government policy encouraged spending and borrowing as if there was no tomorrow. But there is a tomorrow. And for those approaching retirement, it is looking distinctly bleak."
	Let us be clear: we do not believe that increasing taxes on pensions is the right thing to do. We do not support it, but we are not going to be dragged into playing Labour's games. There are a number of new tax rises with which we do not agree, but this one will have to take its place in the queue. Our priority is that, of all of Gordon Brown's tax rises, the most important ones—

Mr. Deputy Speaker: Order. I am sorry to interrupt the right hon. Lady, but she knows that we refer to colleagues not by their name but by their constituency.

Theresa May: I apologise to the House and to you, Mr. Deputy Speaker.
	Our priority is that, of all the Prime Minister's tax rises, the most important ones to avoid are those that tax the many, not the few. The most unfair of those is the national insurance increase for millions of people earning £20,000 or more—a tax on jobs. At the very time that Britain will be trying to recover from recession, when millions of unemployed want to get back into work, Labour wants to raise a tax on jobs. We will ignore the dog-whistle politics that was presented in last week's Budget, and focus on avoiding Labour's tax cuts for the many, not the few.
	This country needs a Government who will be honest with people about the problems we face and the mess that we are in. We desperately need a realistic route map to recovery, instead of the fantasy forecasts from the Government that do not last even a day. I shall be helpful to the Secretary of State and suggest that the best thing he can do now is launch the leadership campaign that he has been busy planning for months and call a general election, so that Britain can have the change that it desperately needs.

Peter Hain: What was striking about the speech from the right hon. Member for Maidenhead (Mrs. May) was that it was devoid of any content on the policy alternative she might advocate. The policies advocated so effectively by my right hon. Friend the Secretary of State would be unaffordable and undeliverable if Conservative policy cuts were implemented. I shall explain why.
	The economy is contracting faster than the Treasury expected only five months ago, so the Chancellor was right in the Budget to give a further fiscal stimulus, expanding the one announced in November. It brought total fiscal support through discretionary action in the Budget, the pre-Budget report and the automatic stabilisers to 4 per cent. of GDP, on top of the other action to boost the flow of credit and cut interest rates. Goodness knows where the economy might be heading now if the Government had instead followed Conservative strictures, and had not acted promptly to adopt a Keynesian response to the crisis.
	The Budget also did the right thing by boosting public investment this year to £44 billion, compared with the £35 billion the Chancellor was planning to spend 12 months ago. These are exactly the right policies and priorities to stop a slide into slump, and exactly the right strategy to ensure that the recession is not deeper and longer.
	Conservatives seem to forget that the purpose of extra public borrowing is to make up for the collapse in private spending brought about by the global financial crisis. By helping families who are in danger of losing their homes and their livelihoods, and by helping firms that cannot spend because their banks will no longer lend, Government can stop economic casualties turning into social catastrophes. Without such Government action and borrowing, millions more jobs, and tens of thousands more businesses, would be in jeopardy.
	Borrowing is rising because of the impact on UK public finances of the world economic crisis, not the so-called public spending extravagance beloved of the leader of the Conservative party and his right-wing media allies. The Institute for Fiscal Studies reckons that the global financial crisis is costing the Exchequer around £90 billion per year, owing to lost tax revenues and higher social security costs. The fiscal stimulus since last year's Budget accounts for only about £26 billion of the nearly £400 billion increase in Government debt to 2012, or roughly one fifteenth of that total.
	No one here or elsewhere in the world foresaw the severity of the crisis currently gripping the global economy. Perhaps that is why, after 15 years of expanding UK employment, and Labour's 11 years of unprecedented stability and growth, much of the media appear both bewitched and bewildered by the prospects for Government borrowing and national debt. In one surreal moment last week I heard the Chancellor on the BBC "Today" programme being asked by Evan Davis about Government borrowing for the Budget, not last week or even next year, but in 2014.
	Even more preposterous is media speculation about borrowing and debt in 25 years' time, when the average Budget forecasting error is £12 billion for net public borrowing looking just one year ahead. Many commentators have become spellbound by long-term forecasts of public sector borrowing, and are quite unable to focus on the benefits that such borrowing brings, or to contemplate the truly horrendous alternative without it.

Stephen Hammond: I have been listening carefully to the right hon. Gentleman's arguments about forecasting errors. That implies that the Treasury's forecasting is so bad that we should not take any notice of it.

Peter Hain: The hon. Gentleman will know if he looks at Treasury forecasts that under all Governments, there is always an element of error. The point that I was making is that the amount is much more significant than all the figures being flung about by the Conservatives and their media allies.

Several hon. Members: rose —

Peter Hain: Given that, like others, I am time-limited, I shall make some more progress.
	It was only a few years ago that Britain finally finished paying off its 1947 American loan that helped to pay for post-war reconstruction. It took us more than 50 years to do so. Does anyone seriously say that we should not have borrowed on a substantial scale to rebuild the nation's social fabric shattered by the war? Perhaps there are some Conservatives and media commentators who sympathise with Johnny Speight's character Alf Garnett, who criticised Winston Churchill for failing to get an estimate of the costs before fighting the second world war.
	As with mortgages for owner-occupied housing, good investments are things that are worth more than they cost to acquire at the time. Who can seriously argue that Governments who borrow to prevent a depression are making a bad investment, as the Conservatives appear to be saying? They have failed to learn the grim lesson of the 1930s that cutting Government spending during a recession only makes the economic situation worse, causing total spending in the economy to fall even further, resulting in more redundancies, higher social security spending and even higher Government borrowing and debt. Spending cuts in today's circumstances would be a self-inflicted wound that would weaken, not strengthen, our ability to recover. They could turn business parks into gone-out-of-business parks and trading estates into ceased-trading estates.
	By contrast, we see higher public spending and increased Government borrowing to ward off recession as the right role of the state now. In our view, Government's job is to provide a safety net in troubled times, support and opportunity for the good times, and security and protection at all times, not to leave people in the lurch to fend for themselves, which the Conservatives would do. Of course the economy needs to be brought back into balance in the future, but the overriding priority today is not Government debt. It is the danger of depression and rising unemployment. The bond market must take second place to the labour market.

Ian Gibson: Will my right hon. Friend give way?

Peter Hain: Tackling the threat of slump, which means combining vigorous fiscal and monetary policy with unconventional measures to restore the flow of credit, is vital to recovery. Of course, once we have warded off the threat of recession or depression there is no escaping our responsibility to bring the public finances back into shape in the medium term, as the Chancellor has made clear. That must mean reshaping the subsequent trajectory of Government spending and taxation, which means cuts in some past plans, deferring other ambitions and raising some taxes on a fair basis. But today's problems must come first.
	The severity of the current threat to the world economy remains widely unacknowledged, despite the evidence of world trade falling faster than it did at the onset of the 1930s great depression, and despite industrial production plunging all over the world, including in the UK. There is reluctance on the Conservative Benches to admit that this recession is different from every other post-war recession, both in its origins and in its scale. [Hon. Members: "It is worse."] Indeed, and it is much more serious because of the global financial crisis that the Conservatives refuse to acknowledge. There is a refusal to accept that we are passing through extraordinary times that demand an extraordinary response, with action on a scale unprecedented in the post-war period.
	It was Franklin Roosevelt's new deal public works projects, combined with bank reforms and monetary measures, and not cuts, that first triggered the American turnaround that began in 1933, and then fuelled expansion over the next four years.
	I have been impressed by the advice given by that lone voice on the Bank of England Monetary Policy Committee, David Blanchflower. He was the first to warn of the danger of recession and the first to call for early interest rate cuts. He has proved consistently correct in his reading of the economy. His most recent warning is that, without strong fiscal action, precisely of the kind that the Chancellor announced last week, today's downturn could fall further and last longer than any recent recession, causing UK unemployment to soar towards 4 million next year, potentially condemning a generation of Britain's young workers to years on the dole.
	The Conservative party has an obligation to be straight with voters and with the House. The shadow Business Secretary can ooze warm reassurance with the best of them, but one has only to look at the shadow Chancellor to see that it is only a short way from guile to guilt. The Leader of the Opposition described the Government's record as being written in red ink. When will he show us the colour of his party's money? So far, all the public have been offered is counterfeit currency. The Conservatives have pledged to prioritise cutting Government debt ahead of tax cuts and to restrain Government spending, but the Opposition will not come clean about the huge cuts that would be needed if they were to achieve their ambitions. They have given headline-grabbing examples such as regional assembly abolition and senior public servant pay restraint, but those savings would barely register on the spending Richter scale. More ominously, they propose cutting tax credits for middle-income families and the pay of nurses and teachers. Those people are at the economy's centre of gravity: squeeze them and we squeeze the whole economy, as well as damaging vital public services.

Philip Hammond: I am listening carefully to the right hon. Gentleman. He knows that the figures that the Chancellor set out in his Budget last week, after taking into account the increases in benefits and debt service costs, equate to a minus 2.3 per cent. rate of growth in departmental expenditure budgets—a 2.3 per cent. real-terms cut in departmental expenditure budgets. The right hon. Member for Neath (Mr. Hain) may have an inside track, however, so does he know where the Government will allocate those unprecedented cuts in departmental budgets?

Peter Hain: One thing that is absolutely clear is that if the hon. Gentleman ever got his hands on the Chief Secretary to the Treasury's job, the cuts would be savage—way beyond the efficiency savings and restraint that will have to be implemented.
	The Tories talk a good fight on debt, but, on public spending, would they revert to Margaret Thatcher's policy and abandon Labour's pledge to restore the link between the basic state pension and earnings? Would they reduce the pension credit that helps the poorest pensioners? Would they raise the age at which people qualify for free prescriptions? Would they bring in charges for public services, such as visits to the doctor, or lift the ceiling on student fees in universities and colleges? Would they scrap teaching assistants in schools? On debt, if the Tories were to match their rhetoric with their actions, the cuts for low and middle-income Britain would have to be savage.
	The lobby group Reform has proposed a £30 billion cut in Government spending next year to give the Tories' plans a flying start, and £30 billion, by the way, corresponds to 2 per cent. of GDP—exactly the amount by which the Tories cut Government borrowing in their 1981 Budget, which saw unemployment soar above 3 million and stay there for four years. So, perhaps it is not such a far-fetched figure if we want to divine the Tories' true intentions.
	Let us look at Reform's list: a 10 per cent. pay cut for all doctors and NHS managers, with £1 billion saved; scrapping winter fuel payments for pensioners and ending free TV licences for the over-75s, with another £3 billion saved; abolishing universal child benefit and targeting it on low-income families, saving £7 billion; and raising the interest rate on student loans to market rates, with another £1 billion saved. Pretty soon, we will be talking serious money, and the group has not even started scrapping pay deals for local government workers or cutting public sector pensions, as the Conservatives have promised.
	The media have given the Tories a really easy ride, so the Conservative leader will not say where they will cut public spending, and they will not come clean on taxes. So, let us look at their record in office for a few clues. The first Budget of Margaret Thatcher's Administration saw Geoffrey Howe almost double VAT from 8 to 15 per cent. to pay for income tax cuts. The first Budget of John Major's Government saw Norman Lamont raise VAT again, to 17.5 per cent. to pay for the poll tax. Can the shadow Chancellor deny that he is considering raising VAT to 20 per cent. if they win next time to cut Government debt and pay for the cuts in inheritance and income taxes that he has promised? Can he rule out dropping zero rating for food, fares and children's clothing?
	The Tories have cultivated the image of "compassionate Conservatism". We heard that phrase first from George Bush, and we know how destructive his policies were. At Davos, the Conservative leader promised "capitalism with a conscience", but it would be with a guilty conscience. Two days before the Budget, a  Financial Times editorial noted that tightening fiscal policy now might deepen the recession and worsen the subsequent fiscal outcome—what it termed "futile masochism". Yet, what does the Leader of the Opposition want? He wants exactly such spending restraint. And when does he want it? Now. That is what he said in his reply to the Budget. By driving the economy into depression, the Cameron cuts would shrink tax revenues and swell social security bills. The outcome would be the opposite of what he has promised, meaning even higher Government borrowing, yet more national debt and mass misery for millions sacrificed on the altar of right-wing Tory dogma.
	Despite that, the media in general and, sadly, the BBC in particular have dutifully followed the Leader of the Opposition like lapdogs. They treat all Government borrowing as bad, irrespective of circumstances, and hardly bother to examine the terrible consequences for jobs and living standards of the Tory alternative. It is as if the whole economic debate were being filtered through a single, false prism of debt, and that is quite absurd.
	Yes, this Budget is a tough one, but it contains the seeds of hope. The Conservative alternative would not simply be tough, it would be disastrous, sowing the seeds of abject despair for millions and driving Britain backwards.

Vincent Cable: We are dealing in this debate with two overlapping crises, both of them very serious. First, there is the slump, which is causing large-scale unemployment and requires activism at Government level, not just through fiscal policy but, certainly, including it; and, secondly, there is the looming and truly enormous problem of the budget deficit, which is on a scale—revealed last week—that we cannot treat as anything other than critical. I regret that the right hon. Member for Neath (Mr. Hain), many of whose early comments I agreed with, did not take sufficient account of the seriousness of that problem and of the choices that we will all have to face because of it.
	I shall begin with the unemployment situation, which is where the debate started. Then, I shall proceed to wider economic matters, leading to my conclusion. We face the reality of unemployment increasing by 100,000 a month, and the prospect, on a fairly conservative forecast, that one in 10 of the labour force will be out of work by the end of the year. The situation will be concentrated in certain areas. This lunchtime I had a meeting with construction industry representatives, and they think that 500,000 of their employees will be out of work by the end of this year. That will bear particularly heavily on young people. I—like colleagues from all parts of the House, I am sure—was recently in discussions with local universities, and, in the wake of the milk round, many estimate that, this year, one in two of their graduates will not have jobs to go to. A lot of pain will be concentrated among them, as well as among less well educated young people.
	It is fair to say that the Budget contained a series of measures that, in themselves, were perfectly desirable and sensible, such as attempts to stimulate the economy and, therefore, employment in different ways. The problem with many of the specific measures, however, was their extremely small impact. I shall touch on two measures. There is the proposal for investment allowances, which are eminently sensible, a response to requests from the business community and welcome in themselves. There was also a useful advance on trade credit insurance, but the problem is that it comes very late in the day—three months after the French introduced a similar scheme—and trade insurers now tell us that they will not implement the top-ups under the scheme. They are not satisfied with the data—the annual accounts of companies—that are available to them, so there is continued credit restriction in that field.
	The problem with the Budget, faced with rising unemployment and the need to do something about it, can be summed up by what the Government did on social housing. With a bit of a fanfare, they announced £100 million for council housing, but, when we break that down, it means 600 to 700 houses throughout Britain, or two per constituency. One might say that that argument is unfair, because the announcement comes on top of the pre-Budget report, which, if fully implemented, would probably give us 6,000 to 7,000 houses throughout Britain; however, given the scale of the problem, the contraction of the construction industry and the 1.7 million people on home waiting lists, we are talking about small drops in large oceans.
	We recognise the financial constraints that the Government are operating under, and that if resources were to be channelled into job creation schemes, it would have to be done by stopping something else. We have therefore argued that the Government should stop the cut in value added tax. We understand why they did it—they were in a panic in the autumn and had to do something quickly—but it soon became apparent that it was not working. It was not feeding through into employment—a lot of it was ending up absorbed in retail margins. Now, we can reflect on that evidence, stop the cut and redirect that funding into focused programmes. Social housing would be the most important area, and it could be done quickly because the institutions are already available. Amplifying the home insulation programme would provide environmental benefits, as well as jobs and the creation of an asset.

David Davies: I am listening to the hon. Gentleman with interest. He is outlining certain things that his party would like to do, but he is not saying whether the total amount of borrowing and selling of gilts would be higher or lower if it were in office.

Vincent Cable: As I said, we are suggesting cancelling the VAT cut to provide funding for social investment. There is also an argument for maintaining the flow of public investment through the cycle; that is a separate issue, and we can go on to discuss its implications.
	What is absolutely crucial is what is happening in the banking system. The banking system is the elephant in the room. The measures that the Government introduced are of a minuscule proportion by comparison with the scale of lending decisions by the now semi-nationalised banks. Just to remind ourselves—I have often said this in the past—the semi-nationalised Royal Bank of Scotland has a balance sheet one and a half times bigger than the British economy. It follows that any of its lending decisions far outweigh the fiscal stimulus, or whatever the Government call it, that originated in the Budget.
	Two worrying aspects of the controversy regarding the banking system arose during Treasury questions today. First, there is a complete lack of clarity about the potential losses resulting from Government intervention in the banking system. We fully supported that intervention, which had to happen. We do not agree with some of the more recent developments, such as the asset protection scheme, but the intervention last October to put fresh capital into the banks was absolutely essential. However, we are now getting wildly different estimates of the potential losses. The Government have said—it was confirmed in Treasury questions—that the estimate was at the top end, in the order of 3 per cent. of GDP, or about £50 billion. The IMF, even with its qualified and reduced numbers, is talking about £130 billion; £85 billion is a large margin of error, by any estimate. We need some thoughtful figures from the Treasury about what the implications of that would be. Who would bear those losses? How much would accrue to the Treasury? How much would it affect its debt and deficit estimates in the years ahead? There is an enormous black hole over and above the deficits and debts that have already been predicted, and we need to think about that.
	The second, more immediate worry is the Government's decision—apparently—to proceed with the rapid sale of Northern Rock. The Chancellor said in Treasury questions that he was not in any hurry, but if that is so, why is Credit Suisse going round the City trying to market it? The Government are clearly planning a sale of the bank. I have no objection in principle to its re-privatisation—we argued from the outset that it was a temporary nationalisation—but to sell it now, in depressed asset markets, is absolutely criminal. It means that the taxpayer will get a very poor return, and there will be very large and unnecessary losses. All the experience that we have learned from other countries that have been through this process, such as Sweden and Israel, is that if Governments show patience and sell off their good banking institutions at the end of a crisis, they can realise many of the losses that they have incurred on the taxpayer's behalf. The Government must not rush ahead with this sale. Quite apart from the financial aspects, Northern Rock, after a somewhat uncertain start when it thought that its job was simply to run down its books, is now lending—it is one of the few banks that seems willing to do so in otherwise depressed markets. It seems beyond comprehension that they should be considering selling it off when it is doing something useful. I hope that the Chief Secretary will be able to elaborate on what the Chancellor said, because the hints that are coming out are very worrying.
	Let me move on to the core issue, which is the scale of the deficit—the 30 per cent. of GDP borrowing requirement and the 10 per cent.-plus of GDP budget deficit going forward. That is bad enough in itself, but we know from the numbers that have emerged that it is unlikely to be reduced in any foreseeable time scale unless we make heroic assumptions about the rate of economic growth. I have debated with the Chief Secretary in the media and elsewhere how implausible some of us think these assumptions are. I think that her view—I do not know if it is the Government's—is that there will be a bounce-back in the economy in much the same way as happened in the last two recessions under the Conservative Government. However, there is a fundamental difference, because in those two recessions, unlike the present one, the banking system was not burnt out. We are now dealing with wrecked financial institutions, which means that we cannot assume that the economy will return, as it would normally, to that kind of growth rate.

Ian Gibson: The hon. Gentleman is painting a gloomy picture, but there are rays of sunshine, are there not? In the insurance industry, for example, he will have seen that Aviva, the parent company of Norwich Union, is boasting that people trust its products and have stuck with them; indeed, savings have increased, and its figures look good at this point. We can be miserable and say that we do not know how things will improve, but that is happening in certain places. Because of good management and good structures, even a FTSE company such as Aviva can survive.

Vincent Cable: That sounds like a very good story, but it does not have anything to do with the revival of economic growth, which is what we are discussing.
	There are some positive things in the public sector figures; following the hon. Gentleman's theme, I will be positive, as perhaps I have been too negative. One very positive statistic, which the Government have not made enough of, is that this year the share of taxation in GDP has fallen to the lowest level for half a century. I do not know whether the Government are aware of this, but they have achieved something that Mrs. Thatcher would have given her right arm for. They have cut the tax burden on the economy to an extraordinarily low level: that may not have been planned for, but it is a real achievement. However, there are two stings in the tail.
	First, while the tax burden in the economy has been dramatically cut, expenditure has not. Whereas the tax burden is at the lowest level since 1960, when Harold Macmillan was Prime Minister, expenditure as a share of the economy is now 48 per cent., as opposed to 35 per cent. for tax. That is the highest level since the Falklands war, when we previously had a peak in this respect. Clearly, we will have a symbolic breakthrough when we hit 50 per cent. of GDP as expenditure in the next year or so.
	The other major explanation is that it has not been done in a planned way and has happened simply because of the collapse in Government revenue. However, I would say in the Government's defence that this is a long-standing problem; it did not just happen over the past 10 years. We have an economy that has, over the past quarter of a century, become seriously over-dependent on income from the City of London and from the housing market. Over the past five years, when some of us have been warning about the vulnerability of the British economy, the Government relied on those two sources alone for half of all the increase in their revenue. Of course, they have now evaporated.

Frank Field: The hon. Gentleman says that the level of expenditure is at about 48 per cent. Did he see table C7 in the Red Book, which shows that even when the Government hope that the economy will be all singing and dancing again, they only get tax revenue back up to just over 38 per cent., so the structural imbalance that he is talking about is projected forward by the Government?

Vincent Cable: Indeed, and depending on one's point of view, that is a source of celebration or of enormous anxiety. I believe that it is a source of anxiety, given the difficulties of funding it.
	The other reason why this problem is not just a short-term one—it is easy to blame the Government for being complacent, but it goes back much further—is clear from the numbers emerging from the Budget and the Red Book. The underlying weakness of the public finances has been clear for many years. If we go back to the beginning of the 1990s, the net worth of the British Government's stock of assets was about 80 per cent. of GDP. It then fell to about 20 per cent. in 1997, as the Government essentially kept the deficit down through asset sales. According to the Government's new projections, the British state will go into negative net worth in two years. In simple, common-sense terms, that means that if all aspects of the British Government were put on the market—all their land, property and equipment—they would have to pay somebody to take them away. That suggests the seriousness of the problem that we face.
	The implications of that are serious. Harsh choices will have to be made about both taxation and public spending. We have taken the view that the burden of those hard choices will have to fall on public expenditure. I shall develop that point in a few moments, but in both cases the choices will be very difficult. There will be tax increase proposals, some of which, such as the fuel duty increase, we will not oppose given the extremity of the situation. In such cases, measures need to be taken to protect people who are particularly vulnerable. That is why we will again propose a rural exemption based on the EU rules, to help people in remote rural areas who will be damaged by the situation. None the less, we will not oppose the principle of such increases.
	The big tax controversy that has emerged in the debate is the 50 per cent. tax rate. Perhaps I should say that I am exceptionally well qualified to talk about that, having argued both sides of the case in recent years. Having had that experience, I am reasonably well equipped with the arguments. I and my colleagues have no objection in principle to high rates of taxation on very wealthy people to fund a more equitable society. That seems absolutely right. The problem is that such things will stick only if the many tax loopholes are dealt with.
	The Government have tried to deal with pension tax relief, although that has created a more complicated system. The big loophole that is outstanding is due to the enormous disparity between tax on earned income and tax on capital gains. We have made the point over and over again that we should return to the wise system introduced by Mrs. Thatcher and Nigel Lawson, when the two were equalised. There is now a yawning gap between the two, and anybody in the City approaching their bosses for a discussion on bonuses will immediately ask, "What's the point of my paying 50 per cent tax on my marginal income when I can convert it into stock and pay 18 per cent. on any capital gains that accrue as a result of the recovery of the stock market?" That is obvious, and they probably do not even need an army of tax accountants to help them do it.
	I understand, although I was not there, that in the Treasury Committee this morning, Treasury officials conceded that as a result of such continuing tax loopholes, the Government would be able to collect only something in the order of 30 per cent. of the potential revenue from the income tax increase. Even their own estimates take no account whatever of the decline in indirect taxation that will be the result of the change. Our view is that the Government have missed a major opportunity to have a much more broadly based, but more equitable, tax system. They could indeed have a higher tax take from high-income groups, but with an optimum maximum tax rate of probably about 40 per cent, provided that they closed all the loopholes associated with it, whether on pension tax relief or capital gains tax. In that way, they would raise substantially more revenue, which could be used to lift people on low incomes out of income tax altogether. That is our broad approach to the problem.

Edward Timpson: Is not the tax rise announced in the Budget about which we should be most concerned the rise in national insurance contributions, and the fact that anyone earning £20,000 or more will be worse off as a result?

Vincent Cable: In many ways, that is consistent with what I have said about the need to lift people out of income tax. National insurance on employees is a form of income tax, and we can debate whether we should operate through income tax itself or through national insurance. We certainly want any revenue raised from high-income groups to be used to reduce the tax burden. We have argued that that should be done through income tax, and no doubt the hon. Gentleman would argue that it should be done by reducing national insurance contributions for people on low pay.
	It is clear that there will be cuts in public spending in this Budget. That point has been accepted. There have been exchanges at the Dispatch Box about the £5 billion a year additional efficiency savings, and I ask the obvious question why, if the Government knew that there were inefficiencies and that money could be saved, they have tolerated them. If they are genuine efficiency savings, why are they necessary? They are not efficiency savings—we know that they are just a camouflage for real cuts, 60 per cent. of which, incidentally, will be in the national health service. That is clearly part of the plan.
	The other big cuts that are coming down the track are in public investment. That suggests to us a need to approach the public spending crisis in a much more thoughtful way. The danger is that Governments of any party will resort to the traditional reflex action when faced with a public expenditure crisis. They first cut money to local government, because there is usually another party running it and it is less painful to central Government. The next step is to cut public investment, because that loss is usually borne by the private sector. Then there is the salami-slicing approach, whereby they choose a growth rate cut and let it work its way through its system, usually resulting in cuts to front-line services.
	That is why we are arguing, rather differently from the right hon. Member for Neath, that we need to examine big chunks of public expenditure, some of which are popular and attractive, that are not sustainable under the present conditions. I should perhaps own up to the fact that I was at the launch of the reform document that he referred to critically. I disagreed with many of the specific proposals in it, but it did a valuable service in getting us away from all the waffle about the need for more austerity and general reductions in spending, and saying, "Well, if you're going to make cuts, these are some of the things that you should be looking at." Perhaps, having considered cuts to a lot of the things that he mentioned, we should not pursue them, but it was right for the report to point out the areas on which we need to focus.

Peter Hain: I am very interested in what the hon. Gentleman is saying. Like many other people in the country, I follow what he says on this subject with a great interest. However, he seems to be opening the door to the Liberal Democrats following exactly the policy of the Conservatives—swingeing cuts in some of our most essential areas.

Vincent Cable: I hope that we would not be in that position, but we can avoid that only if we are explicit about these things. I hope that the Conservatives will be equally explicit, and that is the debate that we need to have. There has been some encouraging forward movement in the past few days, such as the suggestion that defence programmes that had not previously been mentioned are suddenly going to be cut, so progress is being made on all sides.
	Among the matters that we have highlighted—I am sure that there must be other relevant matters—is one that I raised in a previous debate, the future of public sector pensions. I was shot down from all sides, but then the following day I noticed that the Leader of the Opposition took up the same theme. There is a growing consensus that we cannot continue with the existing arrangements. They will have to be dealt with, and it will be difficult and controversial.
	We have made similar arguments about tax credits, about which there has been a lot of discussion in the Chamber. I recognise that when they were introduced, they were an enlightened step forward and one of the Prime Minister's genuine creations, and one should not disparage them. They have been extremely complicated and faulty in their administration, but I do not deny the vision behind them. However, a system costing £20 billion that includes people with incomes of up to £50,000 cannot be sustained on its present scale, and we must consider how it can be cut back.

John Hayes: I am interested in the hon. Gentleman's approach, with its asymmetrical reduction in public expenditure, but it assumes that public spending is mostly good and that there is no waste or inefficiency across the board. If it does not make that assumption, focusing on some matters and not on others will leave an immense amount of inefficiency and waste unexamined and untouched.

Vincent Cable: The approach that I suggest is rather superior. It is so easy to hide behind generalised waste. Throughout my fairly long political life, Opposition parties in local government and national Government have campaigned on cutting waste, which is difficult. Perhaps the hon. Gentleman would like to consider his party's history. In the 1927 or 1928 election, its members all campaigned as Conservatives and as waste reduction candidates. We have been here before. It is a way of disguising real choices. My approach may propose impossible dilemmas in some cases, but I believe that it is superior.

Stephen Hammond: The hon. Gentleman speaks about real choices and a thoughtful and non-waffly approach. The Liberal Democrat party has a policy of getting 50 per cent. in higher education, while scrapping top-up fees. Will the hon. Gentleman abolish top-up fees?

Vincent Cable: I have argued that we cannot continue with the commitment to 50 per cent. in higher education. Whatever the arrangements for the fee-paying structure, the numbers are not feasible and all parties must retreat from the commitment to one half of the young population going through higher education. That is simply not sustainable. I will happily add that to my list.
	The defence budget is another subject that has opened up interestingly in the past few days. For example, I note that one of Mr. Blair's former colleagues has opened up the future of nuclear deterrent expenditure and there are issues about different weapons systems. We must have that debate.

David Gauke: On the point that my hon. Friend the Member for Wimbledon (Stephen Hammond) made, it is Liberal Democrat policy to scrap top-up fees. Does that remain the policy? If we are to be credible about reducing the burdens on the state, additional items of expenditure need to be tackled.

Vincent Cable: It is a commitment, but its affordability depends on the number of people who qualify. There is an argument about how that number is fixed, and we will address that. It cannot be done on the basis of unrestricted admission and low standards.

Frank Field: I am grateful to the hon. Gentleman for allowing me to intervene and I think that the country is grateful to him for starting the debate about how we balance our books. Let us consider the simple arithmetic: the Government estimate that, by 2013-14, we will raise only 38 per cent. of national income through tax—I say "only", but it is a lot for our constituents—yet we are spending 48 per cent. The review must go way beyond even the hon. Gentleman's list if we are serious about balancing the books and protecting our currency so that perhaps the Government succeed in unloading the shed loads of debt.

Vincent Cable: I do not deny the right hon. Gentleman's argument. Indeed, he and I have tabled a motion on the Order Paper today, expressing his anxieties and saying that we must rise to the challenge.
	In conclusion, I want to refer to the process whereby we pursue matters, as opposed to substance and specific items. In the past, we have said that there needs to be an advance in the discussion of Government budgets and fiscal policy, comparable with that which made the Bank of England independent. For 20 years, Governments in this country and elsewhere struggled with inflation and having an inflation anchor. The concept of independent central banks has been implemented and will be important in the UK as the economy recovers and we get back to inflation. We have nothing comparable for fiscal policy apart from the rules, which have been widely disregarded. Part of the answer, as the Liberal Democrats argued five years ago, is an Ofsted-type system, which has oversight of fiscal rules and their implementation. The Conservatives have devised a variant of that, which is interesting in its slightly different way. However, the House is missing in all that.
	It is striking that we will move from the debate to weeks of intensive discussion of tax proposals in infinite detail, but, apart from the Public Accounts Committee, which the hon. Member for Gainsborough (Mr. Leigh) chairs, there is no systematic discussion in the House of public spending, unless it happens retrospectively. We must introduce a process whereby hon. Members hold a mature debate on the subject and preferably approve or disapprove public expenditure. That is currently missing. It is partly a question of debating points and identifying the items, but we must all recognise that we have a responsibility here to start focusing on that debate, which is currently non-existent.

Several hon. Members: rose —

Madam Deputy Speaker: I remind all hon. Members that Mr. Speaker has imposed a 15-minute limit on Back-Bench contributions.

Tom Clarke: It is a pleasure to follow the hon. Member for Twickenham (Dr. Cable). At least there is some consistency in his comments about public expenditure and the commanding heights of the economy. It leads me to conclude that our Government have acted wisely to deal with the banks.
	It pains me to criticise the right hon. Member for Maidenhead (Mrs. May) because she presented her case with some charm, if little conviction. There was a time when we had 3 million unemployed under the Conservative Government. We were told then that
	"the lady's not for turning."
	Today, it was a case of the lady's not for telling. We did not hear much more about the Opposition's policies.  [Interruption.] Would the hon. Member for Bournemouth, East (Mr. Ellwood) like me to give way, or do Conservative Members intend simply to sit and heckle, as they did disgracefully while my right hon. Friend the Member for Neath (Mr. Hain) was speaking?

Tobias Ellwood: The right hon. Gentleman knows that I have a lot of respect for him, but I am concerned because, as has been said time and again, the debate is about the Budget—Labour's Budget. It is not about Conservative plans. If Labour Members want to hear about Conservative plans, they should call the election.

Tom Clarke: I well understand why the hon. Gentleman does not want to speak about Conservative plans. However, in our democratic assembly, we pay the Leader of the Opposition not only to criticise the Government constructively, but to tell us and the British people the alternatives that he offers. Today, we are again bereft of that.
	I want to talk about the Budget and to thank my right hon. Friend the Chancellor for some of the specific measures that are proposed at a time of international crisis. For example, £100 will be added to every disabled child's trust fund, with an additional £200 for the most severely disabled. The great merit of that is that we know that the money will go to disabled children and their families, unlike the £34 million that went to Scotland—we know not where it is now.
	Of course, I want to speak about the downturn, which has dominated our thinking. My right hon. Friend the Member for Neath was right—I am glad that he said it—that even the BBC refers to "Labour's recession." Only a few weeks ago, the G20 was held in London. Countries such as China, America, France, India, Brazil and many more were represented. Were those representatives there to talk about Labour's recession, or did they accept the case for dealing with the global downturn, which means working together and not splitting hairs in the way in which we have done again in today's debate?
	The reality, as the Chancellor told us at an earlier stage, is that because of the downturn, 90 million people will fall below the poverty line. We are entitled to deal with that, as well as responding to the views of our constituents. It is no comfort to the British people during this global downturn to look at Germany, Ireland and Iceland, which were being held up as beacons of economic progress, the latter particularly in Scotland. Where are they now? I wish them no ill, but they are facing the realities of the global downturn, and so should we be.
	In my constituency people want to know, quite rightly, how the Budget relates to them. They do so in the knowledge that we have had a Conservative Government in most people's lifetime—that is certainly true for everybody in the Chamber and for most of my constituents. What happened? There were 3 million unemployed and the county of Lanarkshire, including Ravenscraig, Gartcosh and Caterpillar tractors, was devastated. Small firm after small firm seeking to serve what were once great engineering and shipbuilding industries found that their talents, ability and commitment were regarded as a price worth paying. I do not believe that unemployment is ever a price worth paying, and I am glad that such a view is certainly not central among my colleagues on the Front Bench.
	My mind went back in the Budget speech to some earlier Budgets, when I had been sitting beside my late friend and constituency neighbour, John Smith. He would say to me that he judged a Budget by how it impacted on an ordinary person in his constituency. That is how we ought to be talking about the important initiatives contained in this year's Budget.
	On housing, I welcome the extra £500 million in spending, including the extra £100 million for local authorities to build more energy-efficient homes. That is a progressive step. On child benefit, the extra £20 in child tax credit will benefit more than 12,000 families in Coatbridge, Chryston and Bellshill, and I welcome it. The elderly are pivotal to the policies of this Government, as we seek to take people out of poverty. The winter fuel payment, which has done more than anything else to alleviate fuel poverty in my constituency, is to stay at its new higher rate. However, it is time for the energy companies—the electricity and gas suppliers—to respond to the Government's concerns and the actions that we have taken to remove fuel poverty. There is also statutory redundancy pay in the Budget for those who are unfortunate enough to be made redundant. Extra help will now be available to them, with the payment rising from £350 to £380.
	We are being asked in the light of this crisis what strategy our Labour Government have. They have made that clear by their very actions. It was a fellow Welsh MP, as my right hon. Friend the Member for Neath will recall, who asked, "Why look in the crystal ball when you can read it in the book?" Just as we know about the Opposition's policies, which we witnessed when they were in government, let us look at what was delivered this week, among many other initiatives: investments in our future; £1.64 billion of tax relief for business investment; £600 million of extra money for pensioners; £590 million of help for the unemployed; £400 million for the strategic investment fund for business; and £380 million in measures to combat climate change. That hardly sounds to me like a Government who are doing nothing or one who are simply being told that they are wrong, with no ideas whatever coming forward to deal with the current credit crisis.

Christopher Fraser: On the right hon. Gentleman's point about investment in business, does he accept that the inability to secure such investment is ensuring that businesses lay off staff, creating more unemployment as a result?

Tom Clarke: The business people whom I meet in my constituency are well informed enough to know that there are problems internationally, as I have said. However, they also know that if, for example, this weekend's speech by the Leader of the Opposition—I listened for what their policies were; he talked about austerity—means cuts in public expenditure on housing, education, local government, transport and the rest, it will be the small firms above all that will suffer. Indeed, that was the Conservatives' record when they were in office. I will give way if any hon. Gentleman wants to intervene.

Philip Hammond: rose—

Tom Clarke: Hold on, if you don't mind.

Philip Hammond: The right hon. Gentleman said that he would give way.

Tom Clarke: Yes, I will, but I am making my speech in my own way. The hon. Gentleman was asked specific questions on "Newsnight" that he could not answer. I give way so that he might try to answer them now.

Philip Hammond: I do not think that it is the general practice in this House that hon. Members giving way in a debate can make conditions about the interventions to which they gave way. The right hon. Gentleman used the word "austerity". Would he characterise a freeze in real-terms public expenditure as a period of austerity? My right hon. Friend the Member for Maidenhead (Mrs. May) was describing the circumstances that the nation is facing as a result of the crisis delivered upon us by this Government.

Tom Clarke: The hon. Gentleman is not even on message. It was his own party leader who talked about austerity. If we are going to have austerity, the hon. Gentleman will have to be much more open, as his right hon. Friends ought to be, about what exactly that austerity means.
	I come back to the Budget, Madam Deputy Speaker. The decision to put up the top rate of income tax is a difficult one for the Chancellor. I understand that. However, it is not a difficult one for my constituents. Folks in my constituency find it easy, because they know that once again, it is low earners who are losing their homes and jobs. It is they who are being asked to make sacrifices, unless we have both the fairness and the strategy, which I believe is based on decency, that the Chancellor has offered in his Budget.

Philip Hammond: rose—

Tom Clarke: No, I am not giving way any more. There are others who want to speak.
	Public expenditure is important. Why should we hit people with a double whammy, by cutting the numbers of doctors, nurses, teachers and policemen in our communities, which would be the consequence of cutting public expenditure yet again? The Government are accused of not fixing the roof when the sun was shining. Let me tell the hon. Gentleman that there were indeed cases when we did not fix the roof. I remember going round the schools in my constituencies under the previous Government and seeing buckets along the corridor because rain was coming in. I remember the dampness and the kids going to outside toilets.
	I will tell you what we did, Madam Deputy Speaker. In my constituency alone, there has been one new school for every year of this Government—a record of which I am immensely proud. We demolished the schools: we razed them to the ground and built brand new ones. This week I visited Coatbridge college in my constituency. When Opposition Members have time to go and see how real people live— [ Interruption. ] The hon. Gentleman is betraying the manners that he was taught at school. We are told about all the money spent on private education, but nobody in my constituency would be so rude as to interrupt a Member of Parliament, and the hon. Gentleman would be well advised not to do so either.
	We took action to build our economy—action to introduce 2 million new jobs and give young people opportunities. I welcome very much the initiatives in the Budget that apply to 15 to 18-year-olds and others. I refer the hon. Gentleman to my maiden speech on 14 July 1982. I would be ashamed if we returned to a situation similar to the one about which I informed the House in that speech, in which for a job for a young person in the then Strathclyde regional council area, there were 2,500 applications. Are we going back to those days? Not if we in the Labour party have anything to do with it.
	I believe that the Budget was carefully considered and that it reflected the agreements made with the other G20 countries. Those agreements were essential, because this crisis will not be solved by one country alone. I believe that we should be entitled to look the other developed countries in the eye, and to look to the developing countries and to our own people when this crisis is over and say, "Yes, we did give a lead, and it was based on fairness and justice." It is a lead that I look forward to the British people making their decision on, just as we will make ours tonight.

Edward Leigh: It is always a pleasure to follow the right hon. Member for Coatbridge and various other bits of Lanarkshire that I do not remember (Mr. Clarke). I would say to him that no one denies that we are facing a worldwide recession; the debate is about why we are uniquely badly placed to meet it. The Chancellor tells us that we will get through the crisis. Of course the British people will get through it; we need to ask when we will arrive at the calmer waters that we all want to reach, given the £45 billion black hole in our budget. Even the Institute for Fiscal Studies, with all the expertise that it can bring to this subject, finds it difficult to understand where 50 per cent. of the resources to fill that black hole will come from. It refers to measures "yet to be announced", and we would have liked to hear the Secretary of State announcing the measures to plug that black hole here today.
	As Chairman of the Public Accounts Committee, I should like to give the House some of my own personal thoughts on how we should deal with this issue. Those on the Treasury Bench have made some promises that I welcome. I welcome the promised £5 billion of efficiency savings for next year, if they can be achieved. I welcome the goal of £9 billion of back-office efficiencies by 2014. That is a laudable aim. I welcome the £16 billion promised in asset sales by the Government by 2015. That is to be encouraged, but can it be achieved? The hon. Member for Twickenham (Dr. Cable) asked why, if efficiency savings were so clear and so likely to be achieved, it took so long to identify them. The National Audit Office has proved again and again that only about a quarter of the efficiency savings claimed by the Government can actually be validated.

Andrew Love: Does the hon. Gentleman welcome the increase in the rate of income tax to 50 per cent. for those earning more than £100,000 a year?

Edward Leigh: The hon. Gentleman knows perfectly well that I was not talking about income tax at all; I was talking about efficiency gains. If he is going to intervene, he should at least intervene on a subject that I am talking about in my speech.
	I want to turn to the aspirations of the operational efficiency programme, which I welcome. It is a laudable proposal, but will it actually be achieved? The right hon. Member for Neath (Mr. Hain) tried to paint a picture of an incoming Conservative Government cutting vital services. Let me give the House some suggestions of savings that we might make that would not impact on ordinary people. For instance, why is the civil service pay bill running at 1.4 per cent. ahead of that of the private sector? Can we not cut out unnecessary machinery of government changes? The divorce of the Home Office and the Justice Department was very costly, like all divorces. Was it really necessary?
	What about the army of consultants? There are five times more consultants per employee in the public sector than there are in the private sector. That is £10,000 for each civil servant who has a consultant. Do we need them all? Do we need the vast variation in the cost of office accommodation? I have asked before why the Treasury is the most expensive Department in terms of office accommodation. Why can we redeploy only 24,000 civil servants from central London? Could we not get rid of more assets? It is true that the Government got rid of £1.5 billion of assets last year, but they acquired many more. Funnily enough, among those few things that I have been talking about for the past minute or so, I have identified £5 billion-worth of savings, none of which would have any impact whatever on front-line services.
	I want to put some serious questions to the Ministers about the detailed and important announcements that have been made. Will the value for money review group have the authority to make really tough choices? Will the Ministers' champions for money be able to say no to spending beyond their immediate control? Will the non-executive directors that we have been hearing about be able to stop wasteful spending when they see it? Will the public value programme have real targets, expressed in pound signs, and will it go far enough and fast enough? Those are a few questions for Ministers. If those detailed questions on efficiency savings and other matters cannot be answered in clear terms, we might be talking about a sticking plaster to deal with the black hole, rather than a real attempt to fill it.
	I say to my hon. Friends on the Front Bench that if and, I hope, when we come to power next spring, they will be faced by the "Yes, Minster" syndrome. We all know that the mandarins will say, "Minister, what you are proposing is administratively impossible, legally inadmissible, financially unjustifiable and politically unacceptable." Anyone in the Chamber who has been a Minister will know that those are precisely the answers that the civil servants will give. We shall have to slay those shibboleths; we shall need to be very tough indeed.
	The crisis is upon us. The hon. Member for Twickenham made that point very well, as did my right hon. Friend the Member for Maidenhead (Mrs. May). In the five short months since the pre-Budget report, the public sector borrowing requirement has increased by a staggering £280 billion—more than half as much again as the Chancellor's November forecast. As my right hon. Friend said, that is £22,000 for every baby now being born. My sister-in-law came in when we were having a family lunch last weekend and said, "Great news! We're going to have a baby." That new baby will have £22,000 of debt when he or she arrives in the world.
	This is a real crisis. It is much more serious than party political banter. The fact is that the era of imperial spending is over, as is the era of sofa government, of back-of-the-envelope, of Tony Blair committing himself to a new national computer or whatever. That is all finished; it is over. There are such difficult decisions that we now have to make, not only about the NHS computer. Yesterday, the PAC was looking at the third sector, which has not been debated in the House this week. There has been a complete lack of accountability, with £500 million perhaps wasted. We are also considering the Chinook helicopter, GP and consultant contracts, the Olympics, the farce of the Rural Payments Agency and the farce of the Department for Transport's shared services. There has been so much wasteful spending.
	Describing the Budget, the London  Evening Standard put it well:
	"It will surely be nowhere near enough to rescue the public finances. It is hard to see how further cuts are now unavoidable. Some cuts seem obvious: scrapping ID cards, for instance, and freezing plans for colossally expensive government IT upgrades. And there are far more cuts that could be made: a succession of reports from the Commons Public Accounts Committee has identified enormous waste in the public sector. Even then, further tax rises seem likely too."
	This matter is just too important for the kind of intervention made by the hon. Member for Edmonton (Mr. Love). We are talking about a real crisis, real cuts in services and, probably, real tax rises.

John Hayes: My hon. Friend is, as ever, making a persuasive, well-informed and well-structured contribution to our debate. The hon. Member for Twickenham (Dr. Cable) suggested that there might be different ways for Governments to approach these matters. How good have the Government been at taking notice of Public Accounts Committee reports? How responsive have they been to the work that my hon. Friend and his colleagues across the Chamber have done over the years, and how might that be changed?

Edward Leigh: Members of the PAC are very proud of the fact that it is not partisan and that 90 per cent. of our recommendations are accepted by the Government, but the hit rate on delivery is not so great. As the whole Budget process has been mentioned, may I say that it is fantastically weak? When the President of the United States proposes a budget, Congress disposes. Our Budget process is one of the weakest in the world, so last year I proposed having a proper Budget committee. As the hon. Member for Twickenham was saying, we have to address these problems seriously. The Finance Bill will now go into Committee, where hundreds of amendments will be tabled but not one passed, where there will be no proper debate and where an average of a few seconds' consideration will be given to each amendment. That is not good enough for this democratic Chamber. When we are talking about a crisis on this scale, can we not have a proper Budget process whereby we debate these things properly?
	I wish to make one point about how we are going to deal with the national health service and education. I firmly believe that spending on the NHS has to run above inflation to a certain extent, because of an ageing population and the ever-increasing cost of providing reasonable health care, but we must have firm cash limits and we have to trust professionals—the days of targets and of not trusting doctors must be over. This debate will not be reported; all of tomorrow's papers will be talking about swine flu. If that takes off, will anybody want to ask our opinion about it? Will they want to ask the opinion of NHS managers? No, they will want to ask the opinion of doctors; we have to trust professionals in the NHS and in education to deliver those essential services. We politicians constantly say how much we trust and admire professionals, but we constantly take decisions away from them in our schools and our hospitals—that is a debate for another place and another time.
	I am reaching the conclusion of what I wish to say. What we now need is political courage. We must face down fantasy and face up to the real fact of the crisis before us. We must restore Prudence to her proper place and marry her to true efficiency. We must have lean government and we must be more disciplined. Some programmes will not pass muster—some will have to be cut. We should echo President Obama, who said:
	"Where the answer is yes, we intend to move forward. Where the answer is no, programmes will end."
	So courage will count. Some services will have to be withdrawn and we should have the courage to admit it; a lean government will offer less to some, but it will offer more to those genuinely in need.
	Only the resolute, obsessive pursuit of lean government, line by line, programme by programme, will do. Out must go complexity and the farce of the tax credit errors. Out must go waste and Government computers delivering commands in German, as we saw in respect of transport shared services. Out must go the outright failure that has occurred in many programmes, such as the national offender management information system.
	Making government lean, on its own, is not enough. We must ask the following of any programme: does it matter? The  Civil Service Year Book lists 526 central Government bodies—26 bodies are involved in tackling childhood obesity alone. Yesterday, in the Public Accounts Committee, we learned that in respect of the third sector alone 60 civil servants are employed in the Cabinet Office—this organisation that delivers fantastically bad value for money. Although it may not be fashionable, we have to return to stern Gladstonian politics. We need a properly accountable Budget process and we must balance the Budget.

Michael Meacher: The hon. Member for Gainsborough (Mr. Leigh) is entirely right to say that given the extreme danger that we face from the size of the deficit, this Chamber desperately needs a new and much more rigorous democratic procedure for examining a Budget. That is part of the wider democratisation of this Chamber that is greatly needed. We need a much more thorough and comprehensive analysis of the entire range of options, bringing in experts who can give Members in Committee the full range of their expertise.
	I wish to make a rather different point. The unrivalled imperturbability and the hallmark coolness of my right hon. Friend the Chancellor meant that he probably made the best fist of the Budget that he could, given all the circumstances, but I wish to set out why it is the wrong Budget and why it could and should be a very different Budget. The reason why the national debt has ballooned out of all historical proportions and why the cost of servicing it this year is thus so enormous is that the Government's response to the credit meltdown has been misconceived. They have been right to pursue the Keynesian strategy of increasing state expenditure to generate demand in order to head off a slump—my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) spoke powerfully to that end. The Tories have been wrong to advocate letting a brutal self-corrective capitalism play itself out, while keeping a very tight lid on any increase in the national debt incurred by remedial Government action. Having said that, the manner in which the Government have chosen to develop their strategy has been ill-advised.
	As we all know, the Government's approach has been geared to splurging eye-watering sums on bailing out the banks—a staggering £1.2 trillion has been committed so far—in the hope that the banks would correspondingly expand their lending to businesses and home owners. In fact, the banks have been doing the opposite, by continuing to contract their lending. The relevant money supply measure of this lending—M4—fell from 16 per cent. in September 2007, when the crisis began, to the latest figure of just 3.5 per cent. in February.
	One is forced to ask why the Government chose this particular route in order to stimulate the economy. I can assume only that it was because the whole power structure of neo-liberal finance capitalism is built precisely on this close nexus between the banks and the state. The trouble is that the concentration on preserving the current power structure as the first priority has led to the whole of the rest of the economy and society being exposed by the failure of this policy. What the Government should have done—and should still do now—is focus their fiscal stimulus, which I strongly support, directly on businesses and home owners, and not through the intermediation of the banks. A much more stable, less costly and more rewarding Budget would thus become possible.

John Hayes: rose—

Michael Meacher: I shall advance this argument considerably, but I am happy to give way at this point.

John Hayes: The right hon. Gentleman is making a very good point about the paucity of economic modelling that assumes a very traditional relationship between low interest rates and a resultant level of credit and borrowing. What he perhaps might take on board is that that modelling no longer applies, because it is clear that although the stimulus that he described was designed to encourage greater lending, because of the perversity of some of the lenders its effect has been much less than predicted.

Michael Meacher: There are many reasons why the banks are not lending as much as the Government would like, one of which is that they have been given something of a conflict between lending to businesses and, at the same time, building up their balance sheets. The lowering of our interest rate—at the start of the crisis it was 4.5 per cent., which was one of the highest figures in the western world, and it is now 0.5 per cent.—was necessary, but I accept that there have been some perverse effects of the layering of different policies. I wish to develop this argument a bit further. As Paul Krugman, the American winner of the Nobel prize for economics last October, has said, the credit crunch is so drastic and the consequences so cataclysmic that it can be rapidly overcome only by taking temporary control of the banks. To be fair to the Government, they have already partly done that. The key point is that with the strength of the state behind the banks, there would be no need for them to put their own interests first by consolidating their balance sheets as their first priority.
	The Government, as temporary owner—I accept that it should be temporary, but it should also be for as long as necessary—would then be in a position to restore lending to pre-September 2007 levels, which was always the Government's intention. The effect of that on the public finances would be dramatic. Instead of expending £1.2 trillion on propping up the banks, the Government could take them over at a fraction of the cost. The Government have spent £45 billion propping up the Royal Bank of Scotland, but they could have purchased it for £4 billion, which was its stock market value in January this year. Lloyds, which was valued at £35 billion a year ago, could have been bought on the stock market for just £6 billion last October. All of the major banks could have been taken over at a fraction of the cost.
	The Government are now offering mind-blowing sums of taxpayers' money to underwrite the banks' toxic assets—£325 billion in the case of RBS and £250 billion for Lloyds, and Barclays is standing in the wings with a few further hundred billion. But given that the Government are the owners, they should either sell off or junk assets that are next to worthless and then redirect the rest into lending in the wider economy that so desperately needs it. I know that that is a drastic approach, but in such times we must adopt such policies.
	That policy would transform the Budget prospects. The deficit a year ago was just £38 billion. By the time of the pre-Budget report in November, it had soared to £118 billion. It is now £175 billion, and unlikely to fall before reaching £200 billion. The interest charge on this debt was given in the Budget as currently £28 billion a year and the Chancellor expects it to rise to £43 billion a year. If the banks had not been bailed out so profligately and instead lending on a far greater scale had been pumped directly into the economy, thus sharply reducing the costs of business rundowns and rapidly rising unemployment, the rise in the national debt would be far more modest, and the rise in debt interest correspondingly far less.
	It is reasonable to estimate that on that basis the national debt this year might have been reduced by between £70 billion and £100 billion, and the interest on that debt might have come down to below £15 billion a year. That would dramatically change the Budget's bleak projections that investment spending must halve in the three years from 2011-12 and that total spending must be frozen over that period, with actual falls—as the hon. Member for Runnymede and Weybridge (Mr. Hammond) said—in real terms of more than 2 per cent. a year once fast-rising debt interest charges and sharply increasing unemployment costs are taken into account. The only way in which that could be avoided is by a review of policy along the lines that I have set out.

Edward Leigh: Is it not ironic that the right hon. Gentleman is proposing a Thatcherite market solution to bank failure? Funnily enough, I agree with him: if a bank fails, it should be allowed to go bust, with depositors being protected. Do I detect a pincer movement on the Government from both sides?

Michael Meacher: I am somewhat inhibited about embracing the hon. Gentleman, but it is true that I am saying that no bank should be so large that it cannot fail. If banks are manifestly bankrupt, they should be taken over as long, of course, as the depositors are protected. Whatever remains of the assets should then be employed as positively as possible. As for this colossal wave upon wave of credit derivatives that have turned out to be worthless, they should be junked. The idea of protecting the banks and their toxic assets is absurd.
	If those policies were adopted, the much smaller hole in the public accounts would be much more manageable—

Andrew Love: Does my right hon. Friend agree that when we consider whether any bank is too big to fail, we must take into account the one example in which an investment bank was allowed to fail? The consequences for confidence in the markets were catastrophic, and that is a major consideration.

Michael Meacher: My hon. Friend refers to Lehman Brothers, and it is true that the sudden decision to allow it to go bust—a reversal of US Treasury policy up to that point—was unquestionably a severe jolt to confidence, not only on Wall street, but across the world. However, we are in a different situation in this country. I am not saying that the banks should be liquidated out of sight, but that they should be taken over at the value that the stock market gives to them and reconstructed in a different direction. That would not significantly undermine confidence.
	I cannot resist referring to the speech by the Leader of the Opposition to the Conservatives' spring conference in Cheltenham a couple of days ago. As a means of encouraging his "new age of austerity"—his words, not mine—and to deal with the £175 billion hole in the public accounts, he proposed publishing details of all public sector salaries over £150,000 online. What a stunning idea. I am not sure that it would raise more than £0.0001 billion, but it is such a good idea that we should not confine it to the public sector. In the interests of getting everyone to do more for less, perhaps the earnings of bankers, managers, traders, lawyers and all the financial-industrial executives should all be published online if they earn more than £150,000. Why stop at pay, which is so small a part of their remuneration? On the say-so of the Leader of the Opposition we should also publish their bonuses, incentive schemes, fringe benefits and stock options. When I heard that suggestion, I could not help thinking, "Well, Dave, I really think you've started something."
	The Leader of the Opposition went even further. He said that those in the public sector who earn more than the Prime Minister—£195,000—should have to justify their pay to the Chancellor. I thought, "Wow! What a corker of an idea." We should apply that across the economy, including the private sector. There is more joy in heaven over one sinner who repenteth than over 99 just men, but it never occurred to me that that would be the right hon. Member for Witney (Mr. Cameron).
	To be serious again, there are three main ways in which that much smaller hole could and should be dealt with, without paring back front-line public services, especially health, education and housing. Housing, incidentally, is something that I think should not be decreased but should be substantially increased. First, some major spending projects have never been justified. ID cards have a cost of £5 billion, while Trident has cost £70 billion over 25 years. There have been Government IT follies, such as the £6 billion Home Office communications super-database. I am glad to see that the Government are backing off from that. Such projects could be much reduced or entirely shelved.
	Secondly, there could be a real crack down on tax havens, which, as all the authorities recognise, cost this country something in the order of £20 billion a year. We could certainly generate at least £5 billion to £10 billion a year in extra revenue.
	Thirdly, the most popular part of the Budget, which clawed back a tiny part of the gains made by the rich in the past three decades, could certainly be extended. I have been checking on this. Tax could be increased for the 0.5 per cent. of the population that earns more than £150,000 to a rate of 60 per cent., which would raise a further £6.2 billion. For the 1 per cent. who earn more than £100,000, the rate could be 50 per cent. That would leave 99 per cent. of the population entirely unaffected. Higher rate tax reliefs could be removed in other sectors and not just in pensions. Capital gains tax could be modestly restored to parity with income tax, which is exactly where Nigel Lawson left it. Non-domiciled tax exiles could be brought within the tax net from which they should never have been allowed to escape in the first place. I also think—I have thought this for a very long time—that the case for a land value tax should be reviewed and concentrated on the large estates.
	The bottom line for social democracy in this country remains that no cuts can be contemplated in front-line basic services, least of all to take the rap for the bailing out of the banks after they brought about the most reckless and irresponsible blow-out in modern financial history. The Government should look again at an alternative strategy, which could be less costly, far more effective and far less risky.

Jacqui Lait: It is always interesting to listen to the right hon. Member for Oldham, West and Royton (Mr. Meacher), even if it does rather remind me of the years pre-1979 or even the longest suicide note in history—

David Taylor: That was 1983.

Jacqui Lait: I thank the hon. Gentleman for that correction, which is much appreciated, but I know that. I lived through it too.
	What fascinated me was that the right hon. Member for Oldham, West and Royton strongly advocated that the remuneration of high earners should be published online. For the last 20 years, all directors' remunerations have been published in the report and accounts and those—surprise, surprise—are published online these days as are the remunerations of high earners in the City. I suggest that the right hon. Gentleman needs to come up to date and to recognise that this information is already in the public domain.
	I was also fascinated that the right hon. Gentleman should advocate the wholesale nationalisation of the banking system, and I am rather glad that it is his Front Benchers who have to answer that question. May I also point out that the Government have to deal with the issue of toxic debt? They cannot just write it off in the modern global banking system. I would have thought—I have spent some time thinking about this—that it would have been much better if the right hon. Gentleman had advocated a structure similar to the Resolution Trust Corporation that was set up in the '80s to deal with the savings and loans banks in the States. In the end, the corporation returned to the taxpayer a net profit from similar toxic debts. A similar system was set up in Sweden, and, again, there was a small net profit to the taxpayer. In my view, that would be a much better way of getting confidence back into the banks so that they could clean up their balance sheets and get their credit ratings up so that the credit could start flowing again.
	Credit will not flow until the banking system is clean and that, to me, is one of the big failures of the Chancellor's never never land—or cloud cuckoo land—Budget. I did not know which it was when I sat and listened to it last Wednesday. Sadly, they are both too benign descriptions of what the Chancellor has done to this country. To a certain extent, I suppose that we should relieved that the Government are going some way towards admitting the appalling state of the economy that they have managed to create.
	When we have a Labour Government, we always have a bankrupt Government and we always have to sort that out when we come back after a general election. Yet again, we are going through this horrible cycle. A Labour Government spend more money than they can afford and tax people so that they do not want to work in this country, and then we have to sort it out.
	We must get a grip on public expenditure in this country. There is no point in expecting to be able to spend our way continuously out of trouble. Towards the end of the Budget, we got nothing other than expenditure. I am afraid that we cannot continue to spend at the reckless rate that this Government have spent at.
	I thought it was very interesting that, at the end of the Budget speech, there was such a muted reaction from those on the Government Benches. In 20-odd years of observing this Chamber, I have never seen such a muted reaction to any Budget.
	We keep on saying that we have the longest and deepest recession since the second world war. What came immediately before the second world war? The great depression. We should really be comparing events now to those events.
	As many people have said, we have seen the fastest rise in unemployment on record. I went to my Jobcentre Plus in Bromley on Friday—many hon. Members will have made similar visits. Bromley does not usually have high levels of unemployment. It is a wealthy borough. We have seen an increase in unemployment of nearly 100 per cent. in the past year—my right hon. Friend the Member for Maidenhead (Mrs. May) mentioned this point earlier. The biggest increase in employment in my borough has been caused by Jobcentre Plus hiring people to deal with those who are now unemployed. Although the staff in the jobcentre are dealing with people as well as they can, they are used to dealing with people who are unemployed from £30,000-a-year jobs and finding jobs with wages of £30,000. The Government's programmes are not geared towards helping the sort of people who live in the borough of Bromley, and so those people are not finding the help that they would expect.
	Throughout this afternoon's debate, in particular, I have been struck by the way in which the Secretary of State and others on the Government Benches have alleged that the Conservative Government in the '80s did nothing about unemployment. I fought a by-election in Newcastle upon Tyne, in the Tyne Bridge constituency, in 1985. We had youth training schemes—the YTS—and the enterprise allowance scheme. My younger brother took up the opportunity offered by the enterprise allowance scheme very early on, and he is now running a very successful business, as he has done since the 1980s. The job clubs were introduced and there were a wide range of measures to help young people and other people who had lost their jobs. To say that the Thatcher Government did nothing to help people to get back into employment is a Labour party travesty of the highest order.

David Taylor: Will the hon. Lady give way?

Jacqui Lait: I will indeed, and I look forward to hearing the hon. Gentleman's denial of those facts.

David Taylor: I am very happy to go along with the hon. Lady in one regard. At one stage, Mrs. Thatcher did reduce unemployment in this country by the simple device of transferring very many hundreds of thousands of people on to invalidity benefit, particularly in areas such as mine, which was then an active mining area.

Jacqui Lait: It is interesting that the hon. Gentleman talks about the alleged transfer of people to invalidity benefit in the '80s while ignoring what is going on now. There are as many people on invalidity benefit now as there were then, and it is to the shame of the Government that they have still done nothing about it. One of the first things they did when they came in was to abandon the rigorous system we had set up to ensure that only people who were genuinely unable to work should receive that benefit.

Andrew Love: Will the hon. Lady give way?

Jacqui Lait: Just once, briefly.

Andrew Love: I want to comment on what the hon. Lady said about YTS and the other schemes of the mid-'80s. All the evaluations of such schemes have shown that they were virtually worthless. Why? Because the people on them never got a job. There were never any jobs so widespread cynicism developed about the schemes. Ergo, to answer that point, the Labour Government decided that after a year people would have either a training place or a job.

Jacqui Lait: I am fascinated by the hon. Gentleman's point because the criticism of YTS was that if people did not get a job, they got more and more training. What will happen this time? The weasel words offered by the Government are that people will have a job or training. If I was a betting person, I would suggest that the hon. Gentleman should see how often people go from one training programme to another, because until the Government get a grip of the fundamental fault in the economy and get credit flowing again, jobs will not emerge.

Andrew Love: rose—

Jacqui Lait: I do not want this to turn into a dialogue and I did say that we should be brief.

Andrew Love: I thank the hon. Lady for giving way again. I wanted to point out that there will be a significant stimulus in 2010 and 2011. We could go into the details about what it will consist of, but one assumes that it will create jobs for those people to take up.

Jacqui Lait: I am not entirely certain whether the hon. Gentleman is living in cloud cuckoo land or never never land. If credit is not flowing, businesses will not be creating jobs and we shall not see an increase in employment. With the greatest respect, I suggest that until credit is flowing through the system again and businesses in constituencies such as mine in Beckenham start to take on employees again, we will not get the economy going again.
	The economy will not get going until the Government address the whole issue of borrowing. One of my concerns for the long term is their issuance of gilts. There is already resistance to gilt sales. The only way to sell the volume of gilts that the Government will have to produce will be to increase interest rates. The impact of increased interest rates will be an increased need to sell gilts, which means that borrowing will go up—as indeed will inflation, as night follows day. There is no recognition of that by those on the Treasury Bench, nor is there of the fact that if the issuance of gilts is resisted, the UK's credit rating will go down and the Government will be issuing their own junk bonds—their own toxic debt.
	The Budget did nothing to reduce the impact of public debt, apart from an attack on higher earners. We are all agreed that when we open the books, there will be more important things to do than dealing immediately with people who earn larger sums of money. It is unbelievably unfair of the Government to slap a national insurance increase on to the ordinary worker—the person earning £20,000 a year, which these days is not even the average wage. Relieving those people of such levels of taxation is much more important than dealing with anything else.
	Ordinary people in my constituency will not just be hit by national insurance contributions. They are already complaining about the increase in fuel duty, for instance. Unusually, I have received a series of original complaints about the recent 2p per litre hike in the price of petrol. June Skeet, a pensioner, has written to complain. Natasha Osunde, who works on commission and needs her car, has written to complain. Peter Allchin, who is disabled, has written to complain. The new fuel increases will have a huge impact on people who are just trying to get by.
	Pensioners are already under huge pressure from the reduction in interest rates and in their savings income. Businesses are complaining about the impact of the VAT cut; not only has it not increased sales, its implementation has cost them large amounts.
	I am sure that some people in Beckenham will welcome the car scrappage scheme. If it helps the car market, I do not have a problem with it—my car dealers are probably delighted—but I have a rather cynical view about what will happen to all the cars that are to be scrapped. Will they go into the scrap market, thereby reducing the value of scrap metal? Will they take over the fields that are to be freed up by the sale of the new cars coming on to the market? Will they be exported to developing countries and will there be an even bigger scandal because we have exported our old, polluting cars? There are large opportunities in the car scrappage scheme for scams and fiddles.
	A point that has not yet arisen in the debate is the impact on the retail sector of the various increases in business rates. There will be a 30 per cent. Government-imposed increase for the retail sector. There will be a revaluation of commercial property based on 2008 figures, at the height of the property boom. We have already seen the effect of empty property rates and now local authorities could levy a business rate supplement to provide infrastructure.
	People in Beckenham are complaining about the continuing impact on the whole British social scene of the increase in beer prices and its effect on the profitability of pubs. We have talked briefly today about the incompetence of the Learning and Skills Council and the lack of further education and sixth-form funding. That will have a long-term impact on the recovery of the economy.
	Time and again, we see incompetence from this failing Government. It is a long time since we have seen such incompetence. We have seen a real decline in their will to govern. It is time they recognised that they have lost the will and it is time for them to go.

Roberta Blackman-Woods: Most Labour Members thought the Budget a fair and reasonable attempt by the Chancellor to tackle the worst impact of the recession on families and businesses. It identified and supported, where possible, areas for growth in the economy to help us come out of a recession born of the international credit crunch. It really is absurd and ridiculous for Opposition Members to suggest that the global economic downturn can be attributed to the policies of the Labour Government.
	I want to speak about three specific aspects of the Budget and their possible impact on my constituents: help to support unemployed people back into jobs, especially those between 18 and 24; support for businesses, especially those helping us towards a low-carbon future; and help for housing.
	Between 1997 and 2008—the time of the Labour Government—employment in my constituency rose by 17,000, which was an extraordinary and positive development. Unfortunately, unemployment in my constituency is now rising. Therefore, during this recession, it is important that we do not adopt the old Tory policies of the past two recessions, which amounted to doing nothing and writing off not one but probably two generations of families. The Tories did nothing for people who lost their jobs and little for young people in school either. They also took no action to tackle the deindustrialisation of the economy that took place in the 1980s and, to some extent, the 1990s. Critically, that meant that they did not identify and support future growth areas, and they also simultaneously disinvested in education and skills.
	I want to ensure that this Government do not make the same mistakes, so I especially welcome the package to get 250,000 people back into work and to stop young people entering the ranks of the long-term unemployed. The intention is to provide 100,000 jobs for young people, largely through sectoral pathways in the private sector, through a recruitment subsidy of £2,000 and an additional £1,000 for training, and the measure is specifically welcomed by some of my local businesses. The key sectors identified are care, green industries, and hospitality and tourism. They are important for not only our future economy, but the future of our public services.
	It is also worth highlighting the additional £1 billion for creating 100,000 jobs through local authorities and the third sector. The measure is very much about creating jobs in and for our local communities. The local projects will cover such things as arts, the environment and social care. Critically, the jobs will also support the social enterprise sector. I will be urging Durham county council, my local authority, to put forward an expression of interest for some of the money by the May deadline. Parts of County Durham have been particularly affected by the economic downturn, so I hope that some of the money comes our way.
	The Government also outlined support in the Budget for a further 50,000 jobs for those areas that are especially disadvantaged and in which unemployment is hitting hardest. I will be arguing that some of that additional support should come to the north-east in general, and County Durham in particular. The critical aspect of the Government's actions is that they are intervening to support job creation in the parts of the economy that particularly need it and the places in the county hit hardest by the recession.
	Yesterday's debate, which focused on business, clearly showed that the Government intend that a third of the £750 million strategic investment fund should be earmarked for low-carbon projects. If we are not to lose further ground to our competitors, it is essential that, even in these difficult times, money is found to invest in renewable energy projects and low-carbon developments, such as electric cars. I especially welcome the £405 million to support low-carbon industries and advanced green manufacturing that will help to make the UK a world leader. I also welcome support through the renewables obligation for offshore wind investments that reach financial close between now and 2011. It is expected that that will support £9 billion of investment and power up to 2.8 million homes. I welcome the new funding mechanism to support up to four carbon capture and storage demonstration projects and the £90 million to fund detailed preparatory studies. Several north-east Members have been arguing for additional investment in CCS for some time, so we are especially pleased by the inclusion of additional money for that in the Budget.
	In addition to investing in the green economy of the future, the Government need to continue to invest in the development of skills. Of all my sources of anger at the last Conservative Government—there are many, but I will not go into detail because some of them have been outlined—the one about which I feel most strongly is the way in which investment in skills and training ebbed away in each successive year of that Conservative Administration, thus sucking opportunities and young people's potential out of our communities and leaving generations without any prospect of employment and with no belief in themselves. It is essential that the Government keep investing in the development of skills in our communities.
	The Conservatives might be talking about problems with further education college building programmes now, but that is truly ironic, because during their period of tenure, they made no capital investment whatsoever in FE colleges, while the schools in all our constituencies were often past their use-by date.
	Such lack of investment was reflected in the poor attainment of some of our young people. In 1997, about 30 per cent. of young people in County Durham got five or more A to C grades at GCSE, but the 2008 figure was 66.1 per cent. That absolutely huge increase did not happen by magic but because we mended the roof—or, more accurately, built new schools—while the sun was shining and doubled investment in education.
	If the Tories want to know where the money was spent—they appear to need to understand that, because their party's leader tells us each week at the Dispatch Box that the Labour Government wasted it—I would like them to visit my constituency, where they will see the new hospital, the new FE college and new school buildings. There has been record investment in health in my constituency—we have no NHS waiting lists—and there are six Sure Start centres. There has also been a huge increase in employment and industrial development since 1997, although I recognise that that is suffering somewhat at the moment. All that cannot possibly be described as wasted money.
	I urge the Government to continue to invest in not only education and skills, but our public services. I also want the money that goes to universities, especially for science, to be protected because universities and science are essential for our future economic development. The Budget adds to substantial investment in schools and colleges to provide help for training young people and I am pleased that there will be a further £250 million to enable 16 and 17-year-olds to stay in school or undertake training.
	I applaud the money set aside to more than double the provision of apprenticeships. It is important that we have a wide range of qualifications and pathways to employment open for our young people. In my constituency in particular, apprenticeships are a brand of training that is well recognised and valued. Also, nothing is more important than that we continue to invest in Train to Gain.

Philip Hammond: I was trying not to be provoked, but I cannot do it any more. The hon. Lady is reeling out a list of great things on which it is good to spend money and, in a perfect world, of course it would be, but has she read the Budget that her right hon. Friend the Chancellor presented last week? Does she understand the scale of the public spending cuts that he is projecting for the years to come? Does she have any insight into where those cuts will be made if a Labour Government are re-elected?

Roberta Blackman-Woods: I can answer the first part of the question easily: yes, I have read the Budget.
	As I was saying, nothing is more important than that we continue to invest in Train to Gain to support and upskill people in employment. In particular, we must continue to support union learners, who are so excellent at persuading people in the workplace to acquire new skills. We must also encourage young people to value education. I do not think that we can ask them to value their education if we do not value it. We in County Durham were only just starting to overcome the past scepticism about what learning can bring; we must continue to make progress. In partial answer to the hon. Gentleman's question, let me say that, whatever else we do to get efficiency savings, it is critical that we continue to develop our education system and to invest in education and training.
	In my constituency, we have just opened a new school, Durham Johnston, which is excellent—much better than anything that I had imagined; it is state of the art. We also have another school, Framwellgate Moor, starting in about a year, as well as a new academy backed by Durham university. The hon. Gentleman has just demonstrated the truth of my next statement: I simply cannot imagine investment on such a scale happening under a Tory Government. It is unfortunate that the whole of the British media and a great many people in the country apparently have such short memories.
	We must invest in skills development and knowledge transfer if we are to compete in the global economy of the future. I am therefore pleased about the additional funding for the Technology Strategy Board. We in this country have not always managed to apply technological developments well to create jobs; we have to do that better in the future.
	Finally, I hope that the Government will use the additional £600 million to support new house building, as well as the measures previously announced to encourage councils, either themselves or in partnership with others, to build more council houses and to continue to provide affordable homes that are much more energy efficient than those provided in the past. It is a source of great sadness to me that, in my constituency, many opportunities to build affordable and rented properties were not taken by the Liberal Democrat council during the years of growth. The council simply let the market rip, with too many apartments being built, and now we lack good family housing and a real mix of tenures. The Government must put that right by enforcing planning policy statement 3 in any future house building initiatives. We must learn lessons so that money is used wisely from now on to plan for a sustainable future, to invest in low-carbon industries and to ensure that housing is delivered for everyone and not just those who can afford the latest market offering.

Nigel Dodds: There is no doubt that the Budget statement delivered last Wednesday was one of the most significant that the House has heard in several decades, but I strongly suspect that the one that follows the next general election will be the most significant of all. Then, when the real decisions that will affect the whole country are taken, we will see the true extent of where we are headed, although we have a good idea of the general direction, having listened to the Government's projections for future expenditure growth, as well as the Opposition's.
	The context of this year's Budget has changed significantly compared even with last year's. Earlier, we heard an exchange between the right hon. Member for Oldham, West and Royton (Mr. Meacher) and the hon. Member for Edmonton (Mr. Love) in which reference was made to Lehman Brothers. I remember just over a year ago, in the run-up to the US investment conference in Northern Ireland, in my capacity at that time as Minister of Enterprise, Trade and Investment in the Northern Ireland Executive, visiting Wall street and the headquarters of Lehman Brothers. I was taken to the 75th floor, where a presentation was made to me about the bank's global ambitions and how it hoped to expand and perhaps invest in Northern Ireland. The fact that that bank has now disappeared shows the extent of the change that has happened.
	At this time last year, people's biggest concern was the cost of living—the rise in energy prices and the cost of mortgages. Now, their concerns are much more focused on whether they will have a job or keep their home. Various parts of our economy have been devastated, especially the construction industry. We in Northern Ireland know all about that, because the construction industry plays a massive role in our economy, particularly in the private house building sector, which has been utterly devastated. The extent of the downturn and its rapidity have staggered everyone and made people extremely frightened and anxious about where we are headed. We have heard all the talk about unprecedented times and the worst borrowing figures since the second world war. Given the eye-watering amounts that have been mentioned in connection with the banking crisis and so on, for most people these truly are uncharted waters, so they are extremely worried.
	This year's Budget was largely defined by the massive downturn, although I think that most commentators were right to say that the Chancellor has been over-optimistic in his growth projections. The Budget will be regarded historically as very much a holding Budget before the real decisions are taken after next year's election. The fact is we have to deal with the present position; we cannot go over the history of how we arrived here—whether it is entirely a global phenomenon, or more of a domestic creation. I think that there is a little bit of truth in both analyses. The accusation can be made that, since coming to power, the Government have increased public spending based on additional receipts, but gained too little in terms of our public services and structural foundations. However, we have to address the here and now and how we get through the next period.
	During this debate, we have heard much discussion of whether we should go for a fiscal stimulus, or ride out the current crisis and allow matters to take their course, and all the shades of grey between the two views. I have to refer to the contrast between what this country is doing and what others are doing in terms of borrowing now to invest. We should compare that with what is happening in the Irish Republic, which is having to try to cut its way out of recession. Of course, we know that one of the reasons it is in that position is that as part of the eurozone it has a lot less capacity than the United Kingdom, in terms of the currency being devalued, and in terms of borrowing and so on. People in Northern Ireland are grateful at the moment that we are part of the United Kingdom and out of the eurozone. Northern Ireland has benefited on both those scores.
	The daily influx of shoppers from the Irish Republic to Northern Ireland shows that people see real value in the cost of goods and services in Northern Ireland, to the extent that one major national grocery chain in the United Kingdom has a 2 or 3 per cent. share of the market in the Irish Republic without having a single store there. That tells a story, and shows that people are voting with their feet.

John Hayes: While the hon. Gentleman is making a comparison with the approaches taken in different countries, he might consider the following point. There are two ways of approaching the crisis. The first is to inject a fiscal stimulus into the economy, as he put it. However, to make a difference of about 1 per cent. in unemployment, one needs to inject a stimulus of about £39 billion, according to most academic studies. Frankly, the Government simply do not have enough money to do that effectively. The Keynesian route, advocated by the right hon. Member for Oldham, West and Royton (Mr. Meacher) in a very eloquent speech, is simply not possible. The alternative route is retrenchment. The Government are not really going for that in a meaningful way. We are falling between two stools, which is likely to have a very limited effect.

Nigel Dodds: I am grateful for the hon. Gentleman's contribution, and I understand what he is saying; effectively, his point is that if we want to make a real difference, we have to go much further. I remember a previous debate in the House in which the Liberal Democrat spokesman, the hon. Member for Twickenham (Dr. Cable), made the point that the Americans' fiscal stimulus was on a much greater scale, and that it would require something of that magnitude to make a difference. Nevertheless, I believe that it is better to try to inject some kind of fiscal stimulus in the current situation than to go the other way. The approach adopted in the Irish Republic illustrates how painful the alternative is.
	I hold the position of Minister of Finance and Personnel in the Executive, and the fact is that there is a certain amount that the Executive and the Assembly can do locally to try to help the people of Northern Ireland—businesses, communities and hard-working families—through the current challenges and difficulties. We have taken measures to try to do that, such as freezing the small business rates in real terms as of 1 April this year, and introducing the small business rate relief scheme from April next year. We are also bringing forward procurement spend for major capital infrastructure projects in Northern Ireland. We are ensuring that as much of that as possible is spent as quickly as possible. We are introducing the speedier payment of Government invoices, so that money goes out to businesses and firms that are trading with the Government as quickly as possible. There are also reforms to the Planning Service.
	We could go further. Our party has suggested that there is a need to look at the issue of government infrastructure, and how much money we are spending on the machinery of government. A number of Members today referred to suggestions on how public expenditure could be cut without going into the details of individual Departments' spending. In Northern Ireland, we have 11 Departments running a Province of 1.7 million people. There is growing consensus that a Province the size of Northern Ireland does not need 11 Departments; we could get by with a lot fewer.
	We know why that situation came about. During negotiations and debates, primarily between the Social Democratic and Labour party and the Ulster Unionist party, there was a view that we should create many seats around the Cabinet table and elsewhere, to accommodate parties. People need to move on from that and ask, "What is in the best interests of the people of Northern Ireland? What delivers the best value for money?" As regards the duplication of Departments—on that issue alone, before we get down to the issue of cutting the number of Assembly Members and other areas of expenditure that could be looked at—we calculate that we could save the people of Northern Ireland, and the Northern Ireland budget, between £40 and £50 million per annum. That is a significant saving in the context of the Northern Ireland budget. We have to look into that seriously, and I hope that parties in Northern Ireland will do so in the forthcoming period.

Gregory Campbell: My hon. Friend is outlining a range of options that could come before the Northern Ireland Assembly to bring about reductions, and a number of cost-effective steps that could be taken. Does he agree that we are more likely to achieve such aims in a mood of political consensus if all parties commit themselves to adopting such measures? People across Northern Ireland and the UK would think that very wise, and would say, "This is a cost-effective way of ensuring that government works even better in Northern Ireland than it did."

Nigel Dodds: I agree. The greater the political consensus that we can achieve on such approaches to saving money and on making Government work in a leaner, more effective way, and the more that we can devote that money to front-line services—health, education, training, skills and so on—the better.
	On the issue of diverting money, through efficiencies, to front-line services, I want to come on to the public expenditure position arising from the Budget. There was a lot of discussion in earlier parts of the debate on the Budget resolutions on the question of cuts versus efficiencies. There has been a lot of argument about what is a cut, and what is an efficiency. When it comes down to it, it depends on which side of the House one is on, whose cut or efficiency one is talking about, and how it is categorised. I think that all of us agree that efficiencies should be implemented where possible, and where money can be released for front-line services. I do not think that there is any doubt that we should be as efficient as we can be in the delivery of Government and public services.
	In Northern Ireland, the Executive and the Assembly are committed to 3 per cent. efficiency savings, year on year, over the three-year period of the budget. That is on the basis that the moneys saved will be used for front-line services in Northern Ireland. When devolution was set up, the Province was given repeated commitments from the Prime Minister and the then Chancellor that all efficiency savings made over the comprehensive spending review period would be retained by the Executive to allow devolution to bed in. It was on that basis that the Northern Ireland Executive agreed to match the efficiency savings targets for Whitehall Departments. It is therefore deeply regrettable that in the Budget, some £122 million-worth of so-called efficiency savings were announced. That was at the lower end of expectations.
	I welcome the fact that over the next two-year period of the budget, some £116 million will be given to the Northern Ireland Executive's Department for Employment and Learning as a consequence of budget allocations to Whitehall Departments under the Barnett consequentials. However, I seek an assurance from the Chief Secretary to the Treasury that those additional allocations will continue beyond 2010-11, instead of being subject to the same form of smash-and-grab seen after the 2007 CSR. A measure is only truly an efficiency saving if the money is released and spent elsewhere in Northern Ireland. That £122 million is being taken out of Northern Ireland and back to Whitehall.
	When we had a debate about efficiencies or cuts on 27 April, I was interested to note that the Financial Secretary to the Treasury, when challenging Conservative Front Benchers on their proposal for £5 billion of efficiencies in 2009-10, referred to the measures as cuts. He said:
	"Where would the £5 billion spending cuts this year fall?"—[ Official Report, 27 April 2009; Vol. 491, c. 671.]
	If he defines the efficiencies called for by Opposition spokesmen as cuts, the same must apply to the efficiency savings in 2010-11. We are not against efficiency savings: we are prepared to make whatever efficiency savings can be made, but we must deliver those savings to front-line services. Taking that money back to Whitehall is a raid on the Northern Ireland block and the Northern Ireland budget.
	There are a number of UK-wide measures that I welcome, including the decision to retain the increase in the winter fuel allowance for 2009-10. The increase in the child tax credit from 2010 will offer a real benefit to people, and I welcome the improvements to statutory redundancy arrangements. As for local business, I have outlined some of the measures that we have taken in Northern Ireland to help business, and there will be automatic rate relief for businesses in the Province. Parties in Northern Ireland agree that there is still a strong case for a reduction in corporation tax in Northern Ireland in recognition of our unique circumstances, given the land border with the Irish Republic. I accept, however, that the measure to help firms with cash-flow problems will help businesses to survive the downturn, while the enhanced capital allowance for 2009-10 will encourage firms to prepare for recovery.
	The Government have announced a £750 million strategic investment fund to support advanced industrial projects, with a third of the funding earmarked for low-carbon projects. It is important to encourage Northern Ireland firms to apply to that fund, and hopefully they will be considered fairly for support. As I said, people will look back at this year's Budget as a holding Budget, with the significant decisions that will affect the national and local situation in the Province being made in the Budget that follows the next election.

Mark Durkan: I fully agree with the hon. Member for Belfast, North (Mr. Dodds) about the significance of the Budget. I certainly felt a chill in my spine last week as the Chancellor announced the figures. Yes, the figures had been canvassed in the media and elsewhere, but to hear the projected high borrowing figures expressed in the Chamber struck me very deeply indeed.
	We have to contemplate the implications of that scale of borrowing for future Budget exercises and for future public expenditure—the Chancellor has already indicated some of the adjustments that would be required and the squeezes in public expenditure in years to come. Equally, there are implications for projected revenue. Other hon. Members, particularly the hon. Member for Twickenham (Dr. Cable), have spoken about the serious gap between projected revenue over the next few years and projected expenditure, and people have questions about the projections in the Budget.
	We can ask questions about the implications of that scale of borrowing and how we manage it down in years to come, but we must also ask ourselves what the implications for all of us and the future of the economy would be if the Government had not resorted to that scale of borrowing and had not sought to manage the range of interventions with which they have had to deal. In all our assessments of the Budget, we must be mindful of all the issues that are in play.
	Over the past couple of years, as the hon. Member for Belfast, North said, there has been a transformation in the assumptions, presumptions and projections for the Budget and the economy. We have seen a virtual meltdown in parts of the banking sector, both nationally and internationally. People's confidence in financial services has been fundamentally shaken. It is not just public expenditure that has been affected; private investments and pensions have also been deeply affected. That has changed the order of what people expect from politics and from Government, not least in the Budget debate. People want to hear politicians, business and banking leaders tell them as it is—good, bad or uncertain. We need more of that in this debate. I have heard it in some parts of the debates to which I have been able to listen, but inevitably a degree of partisanship has crept in.
	I am not sure that this is particularly a time for dwelling on the records of all sorts of Governments in the past. As an MP for Northern Ireland, whenever I refer to issues in our past that are still current, I get a bit fed up of hearing a lot of English MPs say, "Oh, forget about that—that was 10,15 or 20 years ago. Don't dwell on the past." I have heard an awful lot about the past, however, and the record of previous Governments in the Budget debate, but we very much need to look at the present and the future. Similarly, the Opposition have strayed beyond their legitimate role of talking down the Government's performance to talking down the economy. People should not be so irresponsible as to short-sell the economy with an eye to their own immediate, partisan profit, but there have been undertones of that in what we have heard from some Opposition Members.

Stephen Hammond: I have just heard the hon. Gentleman accuse the Opposition of talking down the economy. The Red Book explicitly says that this will be the longest and deepest recession since the second world war, so I do not think that we can be accused of talking down the economy.

Mark Durkan: I accept fully what the hon. Gentleman said about the Red Book, but as I have said, people expect and want the Government and politicians to tell them as it is—good, bad or uncertain. If things are uncertain, they should be told, which is why I join others in questioning how optimistic some of the projections are. Equally, I recognise that in other respects, the Chancellor has been pretty direct. We must all recognise the enormity of what we are facing—not just what the Government are facing, but what we as a Parliament are facing.
	In the course of the debate a number of Members have raised issues about the degree of parliamentary scrutiny or oversight of some of these matters, which we as a Parliament need to consider. In respect of the current intervention in banking, the bail-out and the high degree of public ownership of a number of banks, we cannot credibly leave it to the Treasury Committee, on top of all the other huge structural issues that it is dealing with in relation to the Budget and other matters, adequately to discharge the legitimate interest of the House in how those matters are handled. We need a special dedicated Committee to deal with that.

William McCrea: Does the hon. Gentleman accept that many business throughout the UK feel themselves short-changed by the banks that have been bailed out? A great deal of pressure is put on business because the banks will not lend them money, even though the businesses are fundamentally sound?

Mark Durkan: I fully accept the point that the hon. Gentleman makes. Indeed, I made a similar point in an intervention in the debate last week. Some of the banks in Northern Ireland—I previously named the Ulster bank, for instance—are, according to some of the business customers whom I have been talking to, are engaged in bondage banking practices. They are trapping and binding people with ever higher rates and charging them very high re-arrangement fees for that purpose. It is not only the Ulster bank that is doing that.
	Banks are operating in the current situation not just to try to extract more money from some businesses but, I believe, to price some businesses off their books and to force firms that are otherwise sound and that are good medium to long-term investments into liquidating and possibly aborting their sound business prospects. We have heard that from all parties in all corners of the House when they refer to banks in their areas and how they are treating businesses.
	That is why we cannot rely on Treasury Ministers to receive the monthly reports that are meant to come via the lending panel. That is no credible scrutiny or oversight. It is no credible way of guaranteeing that the commitments made by the banks, we are told, towards business lending and other lending areas will be honoured in practice. A bank in Northern Ireland has large banners up with the message, "Lending isn't ending", but that is not the message that customers get when they speak to the bank.
	We need to examine our procedures as a Parliament in respect of the special and hopefully temporary intervention in the banks, which will obviously take some time to manage. There are aspects of the Budgetary process that the House should consider. Because of the scale of the issues with which the Government are contending, they could use parliamentary scrutiny to assist in the better proofing and control of expenditure. In his contribution the hon. Member for Belfast, North referred to the Chancellor's projection of efficiency savings later in the Budget cycle, and he spoke of the implications of those for Northern Ireland.
	The fact that the Chancellor is able to project those efficiency savings right down to the impact that they will have on the Northern Ireland block in a couple of years is interesting, but should be set against the fact that there is still no move to curb expenditure or cut out altogether some of the prestige follies that other hon. Members have mentioned. I refer to ID cards and the huge expenditure that there will be on those. There will be a huge outlay on replacing Trident—a huge prestige folly that might have something to do with people's idea of status, but has very little to do with serious modern defence strategy. Other prestige follies include massive, expensive and very questionable databases in the health service and elsewhere. The announcement of some pullback in the telecommunications database was welcome.
	If the Government are serious, and if we as a Parliament are to be serious about trying to rebalance the Budget, which the hon. Member for Gainsborough (Mr. Leigh) spoke about, we must ask how we in Parliament play our role in that. I believe that in some cases Parliament is better than Government at controlling expenditure on such prestige follies, precisely because of the "Yes, Minister" syndrome that the hon. Gentleman mentioned. Such projects become big status issues and big totemic demands within Government. Nobody out there in the country particularly wants them, but Government have a huge need for them and Government know best. There is also a false belief that Government can spend and buy better. More parliamentary control of those big ticket items would be a great help in the future. We need to consider structural reform of the way that we manage Budgets in the House.
	There were significant measures in the Budget, not just the high borrowing figures and the implications for future spending. Because of all the other details in the Budget, perhaps we have lost sight of the Budget's significance in terms of carbon budgeting. It is the first big step towards that. Many people say cynically that the Government have produced a Budget for the short term, with a view to the election, but we should appreciate the enormity and the significance of the carbon budgeting measures. Some hon. Members might disagree with the value of that measure in the present context, but it proves the sincerity of the Government's commitment. The exigencies of the current circumstances are not being used as an excuse to pull back from those principles and targets.
	In the context of the commitment to carbon budgeting and the Budget's positive interventions, there is the £750 million strategic investment fund and the high profile that has been accorded to the low-carbon economy to ensure that we have a green recovery from the recession. I, like the hon. Member for Belfast, North, hope to see Northern Ireland companies avail themselves of that fund and flex their innovatory muscles to make the most of it.
	There are other interventions in respect of business, including some on taxation, so that people can offset losses this year against previous tax. That is very welcome in the circumstances. The measures on payroll shelter and short-work schemes are very important, and I and others will want them reflected in Northern Ireland, using our devolved capacity. We have argued for such measures.
	Given the range of measures that different parts of the manufacturing sector require, we must ask the Government to create a proper framework for intervention. Many different measures have been announced for the short term, and some in the Budget are projected for the short term, but the method whereby different measures are announced by Lord Mandelson in one meeting and then announced somewhere else does not convey the sense of a coherent framework of intervention, and we need one.
	We must ensure also that Europe plays its role in properly allowing creative intervention nationally and regionally. The First Minister and Deputy First Minister of Northern Ireland were in Brussels recently, and the President of the Commission encouraged them to use public spending innovatively. Sometimes, concern about EU state aid rules gets in the way of the innovative use of public expenditure, and EU state aid rules can be called on and used against positive intervention measures. Although the EU says that it is trying to relax those rules, there is no clear framework for what is and is not relaxed, so, when people speculate on possible proposals to help particular sectors and industries, they are not quite sure where things will stand with regard to state-aid. We therefore need to press Europe for a clear regime, so that, nationally and at a devolved regional level, we all know our discretion to intervene to support our competitive businesses, and they are not counted out under those rules.
	We must recognise that, through some of the Budget's other measures, the Government have shown a continuing commitment on child poverty, including the provisions on child tax credits. I also strongly welcome the measures for pensioners to extend the enhanced winter fuel allowance and, on pension credit, to relax the rules on savings limits.
	This has been a mixed Budget in very difficult circumstances. We need to recognise that we are in an unprecedented matrix of uncertainty, and, in that situation, we cannot rely on all the projections. I fully accept that some of the Budget's projections are on the optimistic side, but I am glad that it includes, first, commitments that show the Government's determination to try to protect businesses and people in the front-line economy just as much as they tried to protect the banks, which the Government did not do just because the banks wanted it, but to try to ensure that we, ourselves, had a basis for economic stability; and, secondly, measures to try to offset the impact of unemployment and reverse its pattern where it takes hold, so that it does not just hit and, then, drill down and pervade the economy. Such interventions are welcome, but they will have to be developed, and I hope that the Government listen to Members of this House as we come forward with more schemes and ideas as to how best we can do that.

Lynne Featherstone: I recently went to visit my local citizens advice bureau to see how its staff were faring in the economic downturn. They told me that their recent figures show that visits have increased by nearly half in the past year, and painted a stark picture of the recession in Haringey. They have seen a 44 per cent. increase in visits from residents of Hornsey and Wood Green compared with last year. Most of those new inquiries were job-related; almost twice as many people as last year are asking for employment advice. Unemployment has a knock-on effect on other areas of concern such as debt and benefits advice. Between 2007-08 and 2008-09, there has been a 60 per cent. increase in debt inquiries and a 30 per cent. increase in benefits inquiries.
	A whole raft of people who are usually employed have become, in a sense, a new wave of unemployed. They have no experience of how to work their way round a benefits maze or to understand their statutory rights or what is available to them in help from the Government. Many of my local residents are clearly struggling with the recession and in need of such help and advice. The best way to be recession-proof, or as much so as possible, is to know one's rights and entitlements. The citizens advice bureau is therefore vital.
	I saw a constituent this week who is not so well, and she has been trying for four weeks to be seen at the local CAB. It has a queuing system, so people have to get there very early in the morning. Because my constituent is not well, she waits for an hour and then has to go home again. It is no use having a citizens advice bureau if it is buckling under the weight of the rising number of inquiries resulting from the effects of the recession and if it does not have enough advisers to cope with demand. Given that dramatic rise in inquiries, I was disappointed that there was nothing in the Budget about extra grant funding. Of course, I am on to the local council, Haringey, as well, but its main funding comes from national Government. I am sure that my constituency is not alone in being affected.
	I have been to speak to the North London Network, which comprises very small businesses, including one-person businesses. They are suffering dreadfully. The banks are still not extending loans to them, and there is no relief from their landlords in moratoriums on rent rises. I wondered about the possibility of automating small business rate relief. That is quite complicated to apply for—I think that it is based on square footage—yet it is worth about £1,200 a year to small businesses. It would help them enormously if it were automatic.
	We recently had a debate in this House on what would happen to women in the economic downturn. We agreed, on a cross-party basis, that it would be tragic if the high level of female employment and the advances made on equality were swept away by the recession. Women already have a tough time in the workplace. It was clear from the debate that sectors such as retail and services, which are populated mainly by women who are already poorly paid, would be hit extremely hard, as would part-time work.
	Another problem is employers and others apparently believing that somehow women's earnings are not as important as men's and that if someone has to go, it should be a woman. I have not told the hon. Member for Bromsgrove (Miss Kirkbride) that I would mention her, so I apologise to her, but she raised that issue in the previous debate, saying that she had known people who had heard of such situations. She was absolutely right in her contribution.
	We must also consider maternity costs. In a recession, with employers facing unprecedented challenges in maintaining the viability of their businesses, maternity benefits may be a cost too far, particularly for good employers who pay above the statutory minimum. As employers try to squeeze their costs down, it is not hard to imagine that firms offering maternity pay plus benefits will begin to reduce such costs. Women who choose to stay in work rather than be persuaded out of it will have to manage on a very low amount if their benefit is reduced to the statutory minimum, which is £117.18 a week. Miraculously, most women receive about £400 a week because of good employers providing maternity pay plus benefits. That is a substantial difference.
	Alternatively, if offers are made to women not to come back to work after maternity leave, and instead to receive a redundancy package, it is reasonable to assume that some will exit the workplace. Evidence about that is being collected. They will then face even greater barriers to getting back into work in a few years' time.
	The Minister for Women and Equality and the Government held an event—I want to say a bit of a do—at No. 11 Downing street for women from across the country, who gave evidence about their experience of what the recession is doing to women. That is clearly a major concern, but I did not hear anything in the section of the Budget about helping people fairly that would give direct help to women in the circumstances that I have mentioned.
	There is also a danger that in the recruitment process employers might favour applicants with no children. In an economic downturn, anybody with children is at a disadvantage if they apply for a job. According to the Equal Opportunities Commission in 2005, before it became part of the Equality and Human Rights Commission, 30,000 women a year were sacked for being pregnant. More recently, Nicola Brewer, the chief executive of the commission, said that women were not being employed because it was better for employers not to take them on, as they might open themselves up to the risk of further costs through maternity benefits. It will be terrible if our maternity benefits, which are relatively good although with room for improvement, become a cause of women not being able to access jobs. If the situation is bad now—that was a couple of months ago—we can expect that women will find it harder and harder.

John Hayes: The hon. Lady makes an interesting point. Economists argue that extra costs to businesses through regulation are absorbed during periods of economic growth but exposed, as she argues, in times of economic downturn. Furthermore, they argue that when employers face tougher times, they take steps that they would not take in a period of growth. What measures would her party put in place to counteract that?

Lynne Featherstone: Much as I would like to discuss the measures that my party would put in place, I am actually discussing what the Government are going to do. My intention was to find out whether any direct help would be provided. A debate was held in the House about what would happen to women in an economic downturn, but I did not hear that reflected in the Government's Budget.
	The final matter that I wish to cover is youth. I very much welcome the Government's proposal to guarantee every 18 to 24-year-old a job or training. The prospect of a whole generation of young people coming out of education, particularly tertiary education, to nothing is one of the most appalling aspects of the recession. The loss to an individual of confidence, skills and their future is unconscionable. Let us consider the effect on self-confidence of finding nothing after studying and hoping, and dreaming, of getting a good job. There is a great individual cost, and the loss of a generation of young people with ability, talent and skill to the whole of Great Britain would be immeasurable.

Steve Webb: Does my hon. Friend share my concern that the promise to which she refers will be implemented only after a year, which is long enough even to someone in middle age? It seems an absurdly long time. Does she agree that we can identify young people at high risk of being unemployed for a year almost on day one, and perhaps be more interventionist earlier?

Lynne Featherstone: My hon. Friend makes an interesting point. Indeed, I shall make almost the same point shortly.
	Earlier this year, Martin Bright, who is the former political editor of the  New  Statesman, wrote a piece entitled, "A New Deal of the Mind". I do not know how many hon. Members read it, but the Government were greatly interested and supported it. It was a truly visionary piece, which was about scooping up that potentially lost generation and creating a version of Franklin Roosevelt's new deal of the 1930s. It is targeted more towards those leaving university or tertiary education so that a whole generation will not be lost. It would mean an army of young people employed on projects—the article also suggests using that army to do things that are not normally done—to record, write, film, photograph, design and archive aspects of our lives, the recession and living histories, thus creating a legacy from this era for future generations. They would document all the communities in our land—that does not get done in better times—while battling the scourge of unemployment in current times.
	The article was so inspiring—I tell everyone to google "A New Deal of the Mind"—that it received much cross-party support. There was another bit of a do at No. 11 Downing street to launch the new deal of the mind— [Interruption.] I do not spend all my time at No. 11 Downing street. There was a stellar gathering, with the head of every artistic, musical and literary institute and organisation in this country present. I have never seen a guest list like it. They were all buying into the concept. The Secretary of State for Work and Pensions and the Secretary of State for Culture, Media and Sport were there and fully signed up to the ideal. The hon. Member for Wantage (Mr. Vaizey) also attended and spoke in support. I am sure that it will come as a relief to Conservative Members to know that support was not caveat free, but we all spoke in favour. The leader of my party also supports the new deal of the mind—it is simply a good idea.
	Ideas included a brains trust for the 21st century, a national oral history taskforce, a national family history project and a new deal for art and drama. I have been so enthusiastic about the project since I first heard about it that I have been blogging about it. At the weekend, I visited another constituent, who happens to run a charity. He said, "You're interested in this new deal of the mind—you've been blogging about it." His charity is cataloguing oil paintings in public ownership in every county of the land. He said that if I could hook him up with new deal of the mind, he had an apprenticeship to offer in every county because a book of oil paintings in public ownership is produced for every county. Apart from local councils, there are many people who have a vision, want to help and could be harnessed in that way.
	I hope that the new deal of the mind will be part of the Government's guarantee. As my hon. Friend the Member for Northavon (Steve Webb) said, I do not understand why those projects cannot start from day one. The sooner people leaving college with nowhere to go get involved in that worthy and marvellous idea, the better. What part of the guaranteed budget will be used to ensure that all 18 to 24-year-olds will be in a job? How can it be accessed? How will it work? How much of that budget will go to a new deal of the mind? It is important to realise that vision, which has the hallmark of greatness. It will leave a legacy to this country for which everyone in years to come will be grateful.

John Hayes: It is a pleasure to follow the hon. Member for Hornsey and Wood Green (Lynne Featherstone), who brought a passion and an energy to her advocacy of the aesthetic aspect of what might be done to engage people usefully and purposefully.
	How one responds to the Budget depends on how strongly one feels about the long run. I assert that the political class has become less concerned with the past and the future. The view of the past and the future among politicians has changed, as the here and now has predominated. The "want it all and want it now" culture, which has been fuelled by a "borrow and spend" paradigm, is bound to displace a proper consideration of the long run. Yet surely we know that the present is a momentary thing. We live our lives—do we not?—in the then and the when. Thus an emphasis on the long run is important for politicians and this House, and it is certainly important for the Government.
	The Budget was couched in the language of Keynesianism and we heard something of Keynes from the right hon. Member for Oldham, West and Royton (Mr. Meacher), who made the best speech that we have heard in the debate today. It was Keynes who once famously declared:
	"In the long run we are all dead."
	However, Keynes, as his comments imply, had no children. I, on the other hand, have two young sons. I care desperately about their future and about that of their contemporaries—the children and grandchildren of my constituents in South Holland and The Deepings. That means that I care about the long run and about our duty to those who follow us, a duty that informs my conservatism. I prefer Edmund Burke to Keynes. It was Burke who said:
	"History is a pact between the dead, the living and the yet unborn."
	The Budget breaks that pact. It is the product of politicians and Ministers who are preoccupied by the present, largely ignorant of the past and careless of the future.
	Of course the Chancellor is focusing on how to get through the next 12 months, but to do so he plans to borrow an incredible £175 billion, which is 12.5 per cent. of national income. We surely know across the House that we cannot go on spending for ever, but like St. Augustine, the Chancellor declares, "Lord make me chaste, but not yet." He and the Prime Minister hope that the tough decisions can be delayed until after the general election and probably, therefore, taken by somebody else.
	It is instructive in these circumstances to consider the crisis faced by the Labour Government in 1931. Then a Scottish Labour Prime Minister put country before party. Now a Scottish Prime Minister should do the same, yet the Budget burdens future generations with a mountain of debt. The Institute for Fiscal Studies has estimated that the national debt will return to sustainable levels in 2032, which is 23 years from now. That is not acceptable. I do not want to be excessively partisan—these debates are often too partisan—but in the end, when the Prime Minister speaks of a "decade of irresponsibility", one has to reflect that he was the man, first as Chancellor and now as Prime Minister, who presided over the policies that fuelled that irresponsibility.
	There was much in the Budget about housing. The Government's policy on housing illustrates the sort of short-termism of which I am so critical. For me, the idea of a home is the emblem of my conservatism. To talk about housing is one thing; to talk of the home lifts us to a different emotional plane. The difference between a house and a home is like the difference between calling a parent a mum or an acquaintance a friend. The home stands at the bright centre of our lives. It is where lives start and end; it is where we return at the end of each day and at the end of all our days. Our hearts are where the home is. But there are far too many people in our country who either do not have a home or do not have the kind of home that they need and deserve.
	Frustrated aspirations to home ownership and overcrowding are the painful symptoms of what is going wrong with Britain. The Government's failure to tackle these problems helps to explain why social mobility has declined. To build a socially mobile, cohesive and socially just society, we need to help people find the homes that they need in the right places, yet we have wasted a decade of opportunities to do so.
	Over the past decade or so, about 24,000 fewer homes a year have been built than under the tenure of the last Conservative Government, and house building has now shrunk to an historically low level. The Government have also failed to develop other methods—particularly share equity—to help people into the homes that they want. In the Budget, the Chancellor promised an extra £80 million for the HomeBuy Direct shared ownership scheme, but that will help a maximum of 10,000 buyers. Even in these grim times, about 10,000 new mortgages are approved per month for first-time buyers. So the sum of £80 million represents one month's mortgage applications, so it is no wonder that experts have already dismissed the proposal as marginal.
	More than five years ago, when I was the shadow Minister for housing, I published a paper proposing 33,000 new homes via HomeBuy, which was far more than the Government were delivering. If they had taken the Opposition's advice then, and backed shared equity when house prices were rising, they could have generated receipts through sales that could have been recycled to provide further support, but instead we had far too little, far too late.
	The same is true if we look at the Chancellor's other proposals on housing. He promised £100 million for local authorities to build new energy-efficient housing, but experts say that that will pay for just 900 new homes at a time when 4.5 million people are on waiting lists for social housing. More than 28,000 people have lost their homes as a result of delays in the implementation of the home owners' mortgage scheme, following its announcement last December. In February, the Prime Minister said that he would do everything in his power to stop repossessions, yet the Council of Mortgage Lenders estimates that there will be 75,000 repossessions this year alone, a rise of 67 per cent. on last year. Members will have seen the figures in today's press which suggest that the repossession rate will continue to rise, and the frightening graph projecting a forecast of mortgage arrears that will undoubtedly lead to yet further repossessions.
	I also want to say something about public debt. We face a future crippled by debt and, while the Prime Minister keeps talking about the global nature of this crisis, we should understand that we are alone in our present approach to debt. Of the G7 countries, not one other will countenance an increase in the level of debt such as that proposed in this Budget. Shockingly, the Office for National Statistics revealed this month that, in the financial year 2008-09, the public sector recorded a deficit of £52.3 billion. That public sector net debt, expressed as a percentage of gross domestic product, was 50.9 per cent. at the end of March 2009, compared with 43.1 per cent. at the end of March 2008. By 2013, total Government debt will rise to a staggering 79 per cent. of GDP. Across the EU, no other country is considering such a rapid rise in debt levels.
	The International Monetary Fund report, "The State of Public Finances", indicates that, from 2009 to 2014, we are alone in our reckless approach to borrowing. Germany's debt will rise from 76.1 to 77.2 per cent., and Spain's will rise from 48.6 to 56.3 per cent. Even for Italy, a country that is no stranger to borrowing, the IMF predicts a rise of under 10 per cent. across the same period.
	The circumstances to be found more widely across the world are even more alarming. China's debt will fall, as will that of Brazil. Indeed, the IMF's "World Economic Outlook" indicates that world public debt, including that of vast numbers of developing economies, will only rise from 61 per cent. in 2008 to 71 per cent. in 2014. All of this risks our competitiveness, productivity and prudence.
	I am not an economic liberal. Indeed, I am not a liberal at all. It is one of the destructive products of the orthodox acceptance of liberalism that we have come to regard individuals and their will as being more important than the history that precedes them, the coming generations that they spawn or the families and communities rich in values and ideas that nurture them. So I am not an economic liberal and have no problem in principle with the role of government in mitigating the excesses of the state of nature. But I am a fiscal conservative. The reason for my being so is that I believe in the long run and the long term—what we see in this Budget and in the Government's economic policies is what happens if one does not. Rather than prepare for the future, the Government built their economic programme on two things—high levels of public debt and private borrowing, and high levels of public expenditure—which in the end could not be sustained.
	Those are the things that fuelled our economy for more than 10 years. They emphasise the material, the immediate and the individual, but what really counts is the permanent, the communal and the prudent, and it seems to me that the day of reckoning has now come. Good parents want the best for their children—as I said, I want the best for mine—and they must despair, as I do, when they read that their children will have to pay for the decisions that we are going to take today. If we want to give our children the best possible chance in life, the opportunities to succeed regardless of from where they start and the chance to live in a home of their own in a strong, cohesive community, we need public policy that focuses on the long term, we need politicians who are prepared to sacrifice the immediate interest for something greater, better and more strategic, and we need a Government who care about the long run.

Stephen Hammond: It is a great honour to be called to speak in this debate, and I am delighted to follow my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes). Deciding exactly what to say is one of the problems for tail-end Charlies in this debate, because although there is a lot to talk about, so much has been said before. I do not seem to get invited to the same number of things as the hon. Member for Hornsey and Wood Green (Lynne Featherstone), so I spent my one-line Whip night off last night, and indeed this morning, reading the contributions that other hon. Members have made—that shows what an exciting chap I am—and I found that it appears that Budgets are judged by certain tests.
	The Secretary of State for Work and Pensions opened today's debate by saying that it should be about people, not statistics, but of course he spent the remainder of his contribution making up statistics and fantasy policies of which to accuse the Conservative Front-Bench team. He missed out the key statistics—the amount of debt with which this Government will saddle future generations and the fall in total managed expenditure that will result. He was completely wrong in what he said, because the statistics are what this is about, for it is they and the forecasts that underlie what the Chancellor has put into the Budget that will determine the fate of people.
	Many hon. Members have observed that every Budget is judged by certain tests, and it seems to me that those tests are threefold. The primary and central test of a Budget is whether it does and will improve the health of our economy and the wealth of our people. In today's economic climate, one might judge that by considering whether a Budget delivers the real help that people need in the recession. One of the concerns expressed by a number of hon. Members has been that some of the help that is available is too little and too late.
	Like other hon. Members, I have received representations from businesses in my constituency over the past three or four months. People tell me that they have heard about various Government schemes to ensure that banks start lending but that are not happening in reality. Representatives from one business came to see me here less than six weeks ago, with exactly that problem, and that business is now relocating to Toulouse rather than staying in Wimbledon.
	Another test should be whether the Budget will put the public finances back into order and deliver sustainable growth. Beyond the central tests, there are two other tests, the first of which is the unravelling test. How long does it take before the forecasts are found to be inaccurate? How long does it take for the consequences of the measures announced to be revealed? Everyone will remember the dramatic 2 per cent. cut in the basic rate of tax, but it only took half an hour to work out that it came at the expense of those paying the 10p tax rate. This Budget has failed that test spectacularly. Even as the Chancellor was speaking, the borrowing numbers—which are linked to the growth numbers—became incredible, and my right hon. Friend the Member for Witney (Mr. Cameron) rightly accused the Chancellor of swallowing the numbers rather than announcing them.
	The third test is the devil in the detail test. Much has been written over the years about the 1997 smash and grab raid on UK pensions, but there are some equally pernicious measures in this Budget on pensions, including the tapering of relief and the limit on one-off contributions that will hit the aspirational and wealth-creating class whom we need to encourage.
	Other hon. Members have spoken about some of the other devils in the detail today, including the point that the support through the tax credit is £20 a year, not £20 a week. The biggest failure of the devil in the detail test is that anyone earning £20,000 a year will see an increase in tax through their national insurance contribution.
	The central test is the health of the economy. As the right hon. Member for Birkenhead (Mr. Field) said, at the moment we are taking 38 per cent. in tax and spending 48 per cent. If the forecasts are wrong, those numbers are wrong, and they are wrong in a harmful direction for the economy. The slowing of growth is the norm for economies in economic cycles: recessions are not, and the UK has had only three recessions since the second world war. Page 200 of the Red Book states clearly that
	"the current downturn is forecast to be much deeper than that of the early 1990s, but not as deep as that of the early 1980s."
	However, if that forecast is wrong, the implications for everyone in this country are even more worrying.

John Hayes: As my hon. Friend will know, recessions have a shape. The Government do not know whether this is a V-shaped recession or a U-shaped recession. Their projections for growth suggest a V-shaped outturn to the recession, and that is not just optimistic but suggests a degree of magic—not so much Dumbledore or Gandalf, but more Tommy Cooper.

Stephen Hammond: It is more likely to be Ali Bongo. He was a failed magician and these are likely to be failed forecasts.
	Page 181 of the Red Book says that UK GDP will contract by 3.25 per cent. in 2009. It then states:
	"As macroeconomic stimulus builds and credit conditions ease"
	there will be
	"annual growth of 1¼ per cent. in 2010"
	and
	"3½ per cent. in 2011".
	We have to ask ourselves whether that is actually credible.
	Let us forget the fact that the IMF disagrees with the 2010 number, and the fact that the Chancellor has just put up the 2011 growth number by a whole percentage point against the figure in his pre-Budget report. The real test of credibility is found in testing against the evidence of history. History teaches us first that recessions are not common, and secondly that quick recoveries from recessions are not common either. Typically, once a trough is reached—this is the point about a U-shaped or V-shaped recession—it takes two years to return to trend growth rates.
	Let us consider the two recessions that are referred to in the Red Book. During the recession of 1979 to 1982, the first quarter of negative growth happened in the first quarter of 1979. However, the recession was not evident until the fourth quarter. We had consistent negative growth through to the first quarter of 1981 and we did not return to trend growth until the first quarter of 1983. The recession of the 1990s followed a shallower but similar pattern. The first quarter of negative growth was in Q3 of 1990 but it was not until Q3 of 1993 that we returned to trend growth.
	It seems to me that what the Chancellor has postulated, which is that we will see a growth of 3.25 per cent. in 2011, borders on the incredible. The first negative quarter of growth in this recession was in the third quarter of 2008. We have had three quarters of negative growth since then. It is quite clear from the Chancellor's prediction for the fall in GDP this year that we will continue to see negative growth quarters up until the fourth quarter of this year—let us be optimistic and say that that will be the last quarter of negative growth. The point is that we will not see any return to trend growth until at least two years after that, which takes us well beyond the Chancellor's expectations for 2011.

Brooks Newmark: The implication, if I understand what my hon. Friend is saying, is that there will once again be a hole in the Government's budget. If growth is not V-shaped, then the tax revenues that the Government have assumed will be collected will not magically appear. Does my hon. Friend share those concerns?

Stephen Hammond: My hon. Friend, as ever, gets to the point that I wanted to make rather more quickly and more eloquently than I did. I am making exactly that point. These statistics and these forecasts do matter, because they matter for people. When they are proved to be wrong, the hole in the public finances will be even bigger, the debt mounting on people will be even bigger and the tax receipts that will have to be raised in the future will be even bigger.
	I accept that there are international causes to this recession, but it is not true that, as one hon. Member said, this is a very different depression or recession from any other. If we look at history, by what are recessions characterised? They are characterised by a sharp drop in house price inflation and a drop in business investment as a percentage of GDP. Company profits and corporate profitability fall as a share of national income. There is a sharp rise in unemployment, a rise in inflation as measured by the retail prices index and a rise in short-term rates. We can all agree that, barring the last two, those features are present in this recession. A number of people would also argue that the difference in inflation as measured by RPI and the consumer prices index shows that a lot of people are experiencing that hike in inflation, because the CPI has been deflated by the mortgage impact.
	A number of people, including in particular the right hon. Member for Oldham, West and Royton (Mr. Meacher), made the point that there is a big difference in lending levels at the moment. The base rate might be at 0.5 per cent., but the banks are lending to the companies that need to make the investment at levels closer to LIBOR and over LIBOR. The banks are not allowing companies to borrow at rates that will allow them to make the investment they need.

John Hayes: My hon. Friend illustrates the point that one of the differences between responses to earlier recessions and to this one is that it is much harder for the Government to pull policy levers that have a direct effect. Interest rates are a classic example; another is what economists call saturation—people are unlikely to spend on capital goods they already have. Cars are a good example, which is one reason the Government's car scheme is unlikely to succeed.

Stephen Hammond: My hon. Friend is obviously correct. He leads me to my next point.
	Today, a number people have spoken about John Maynard Keynes, of whom much is made by the Prime Minister. However, we have forgotten two of Keynes' central propositions, one of which was about counter-cyclicism. After years of growth, the public finances ought to have been in a position to bear large fiscal stimuli, but because the Government spent all the way through the good times, the public finances are not in that order.
	The second point is taken as an absolute shibboleth even though it is not actually what Keynes said. He did not say that we should spend our way out of recession. He said that public finances and public spending might need to be raised, but that what was actually needed was to raise effective demand. There are a number of ways of doing that, which lead directly from my hon. Friend's absolutely correct point about saturation.
	The central point is that the Secretary of State for Work and Pensions was wrong this afternoon. The debate should be about statistics and forecasts, because they will undermine the Budget and its effect on people's lives. It seems to me that history tells us that the Chancellor's forecast numbers are unlikely to prove either credible or sustainable, that a number of the actions taken have been too little, too late, and that there is dishonesty in postponing until after the general election—without telling people—the taxes on the many and the cuts in public expenditure that the Government propose in the Budget.
	The Budget will not return the economy to sustainable growth or restore public finances. As my right hon. Friend the Member for Witney said, it is absolutely true that all Labour Governments run out of money and it will be an incoming Conservative Government who will have to encourage saving, prioritise reductions in taxation on the many and spend responsibly on essential public services. This country needs that cure sooner rather than later.

Tobias Ellwood: It is a pleasure to follow my hon. Friend the Member for Wimbledon (Stephen Hammond) and an honour to be the last Bank-Bench speaker in this important debate on the 2009 Budget. Although my words of wisdom may not be remembered in perpetuity, we shall certainly not forget this important debate.
	I have a six-month-old son. He has yet to learn to say the word "Daddy", let alone "quantitative easing", but it is a statement of the problems we now face that, along with every child yet to be born, he is saddled with a debt of £22,500, thanks to the Government. Not since the war have we been in such a bankrupt and battered state as we are today. It is of course a global economic downturn.

Brooks Newmark: Will my hon. Friend give way?

Tobias Ellwood: So early—I should be delighted.

Brooks Newmark: I was taken by the age of my hon. Friend's new son. Is my hon. Friend aware that his son will probably be 23 or 24 years old before we return to a debt to GDP ratio of about 40 per cent?

Tobias Ellwood: I did not intend that my son should become the focus of the debate, but I am grateful for my hon. Friend's intervention. I thought that I knew how my son would vote, but after he realises that he will have to pay back £22,000, we will be sure of his voting intention.
	The extent to which countries may protect themselves from exposure by avoiding large-scale debt differs from country to country. Thanks to the Government's relaxation of the rules in the UK, banks were lending money that they did not have, to people who could not afford it, in ways that they did not understand. The Bank of England's powers were transferred to the Financial Services Authority, which did not know how to use them, and the Government then saddled the country with debt. They even tried to change the economic cycle to conceal the debt that was being accumulated. As a result, Britain has been the worst hit economically of all G20 countries, which puts in perspective the importance of the 2009 Budget for leading the nation through choppy waters towards a calmer and more stable economic environment.
	As hon. Members have repeated throughout our four-day debate, however, there has been no leadership or vision, or even a sustainable and costed plan. The Budget not only lacked honesty in spirit, but broke Labour's own rules, which have arguably kept them in power for three Parliaments. As soon as the Chancellor sat down last Wednesday, every economist worth his salt was queuing up to criticise the Budget.
	The first criticism was about the amount that the Government will borrow: £348 billion over the next two years. That will not only double the national debt, but exceed the total borrowing of all Governments going back 300 years. If that is not shocking enough, the Government say that borrowing will reach more than £600 billion over the next four years, which will saddle even those taxpayers who are yet to be born.
	The next criticism was about the way in which the Government intend to pay the money back. A pivotal point of the Budget statement—when, if the country had not already written the Government off, they would have done so—was when the Chancellor claimed that the economy would grow by 1.25 per cent. next year. Let us not forget that the Chancellor predicted in the pre-Budget report that GDP in 2009-10 would be 2.5 per cent., with net borrowing at £38 billion and income receipts to the tune of £171 billion. Six months later, he had to admit that the economy would not grow by 2.5 per cent., but shrink by 3.5 per cent., and that net Government borrowing would be not £38 billion but £175 billion. The shortfall comes in because of net income receipts, because they are to be not £171 billion, but just £141 billion.
	How, therefore, can we believe any prediction that the Chancellor or the Prime Minister make? The only thing that can be believed with any assurance is the Chancellor's reputation as the worst forecaster in modern history. I am sure that last Wednesday's statistics will come back to haunt him in November's pre-Budget report.

Brooks Newmark: rose—

Tobias Ellwood: My hon. Friend tests my patience, but I shall give way a second time.

Brooks Newmark: I am grateful to my hon. Friend. He makes a good point about debt, but it would be helpful to set out a broader picture. He talks about debt of £600 billion or £700 billion, but when that is added to what already exists, the figure will be closer to £1.4 trillion, which is 100 per cent. of GDP. While that is shocking in itself, what is most shocking is the Government's lack of transparency, as they are probably hiding an extra £1 trillion or £2 trillion off balance sheet.

Tobias Ellwood: I am grateful to my hon. Friend for giving way.
	My hon. Friend's argument explains exactly why the IMF has dismissed the Budget—no wonder it has been given the nickname of the fantasy Budget. The IMF predicts not a recovery next year, but a worsening of the UK's situation, with not 1.25 per cent. growth, but a decline of about 4 per cent. The bottom line is that the Budget does not add up. The shortfall in tax revenues alone means that an additional £170 billion will be needed this year and next to meet the Government's targets.

Jacqui Lait: My hon. Friend talks about the large borrowing figures, but will he estimate the possible impact of the downgrading of the UK's credit rating because of that requirement?

Tobias Ellwood: My hon. Friend makes a valid point. We are at the mercy of the gilt markets and there is a danger that we will lose our triple A rating as a result, which would have a devastating effect on the economy.
	Today, embarrassingly, many hon. Members have taken us down memory lane: rather than talk about this year's Budget, we have heard all about life under Margaret Thatcher. They fail to remember that it was Denis Healey, the Chancellor at the time, who in 1976 had to go to the IMF, first for a loan and then to be bailed out completely. I have a sneaking suspicion that we are wandering down that road again. I hope not.
	Where did the money go? Where was it all spent? We have had a decade of boom, but it all seems to have disappeared. We all remember the stealth taxes, the doubling of council tax, the increases in corporation tax and the raid on pensions mentioned by my hon. Friend the Member for Wimbledon (Stephen Hammond), which have given Labour a staggering £1.5 trillion extra since they came to power in 1997. Where has it gone? The budgets for schools and hospitals have doubled, but can we say that services have doubled? No, we cannot. That money has been spent, but it has disappeared.
	Every year, 34,000 people die unnecessarily in our hospitals. Cancer survival rates are still 20 per cent. lower here than in other European countries. Somebody catches MRSA or clostridium difficile every 10 minutes and one dies every 80 minutes. That is a scandal, considering how much money has been spent on the health service. In education, the story is the same. The number of NEETs is increasing and one in four primary school children fail to meet basic standards. Now, the funding problems in the Learning and Skills Council are threatening sixth-form places at the very time when people need education.
	Many hon. Members have asked what the Conservatives would do. We have made it clear. Under Labour the economy has been built on debt, which is why my right hon. Friend the Member for Witney (Mr. Cameron) said at his spring forum speech that Britain needs a "complete change of direction" to deal with the new "age of austerity". We need a plan for economic recovery based on savings and ownership, not borrowing and debt. We need a new low-carbon, high-skilled productive and balanced economy that will be the engine of sustainable growth for years to come, and we must reform the public finances and our system of financial regulation, so that no Labour Government will be able to bankrupt us again.
	Tackling Labour's debt crisis entails ensuring that the Government live within their means—that we control public spending and deliver more for less. That needs to start immediately—not in one or two years' time, but straight away. We need a new culture of thrift in government, because it is not Government money, but taxpayers' money. We need to cure our big social problems, not just treat them. That means school reform, welfare reform and strengthening our families.
	Never has it been so easy to turn one's back on responsibility—to give up on education, knowing that the state will pick up the bill. Only now have the Government realised that and started to make amends, but their approach has had a cultural impact that could take a generation to shift. Instead of harnessing the full economic potential of the next generation, this Government have fuelled a cultural shift toward mediocrity. Surely we should be rejuvenating the next generation, encouraging them to stay in school until they are 18 not because the Government told them to, but because they want to; and to seek a job not because otherwise they would lose benefits, but because they have a skill on which they can build, for which they can be paid a good salary and of which they can be proud.
	Finally, I shall discuss an important subject that the House often overlooks: British tourism. With exchange rates where they are and with the opportunity of the Olympics heading our way, tourism is our fifth biggest industry, but, as I said, it is overlooked. Tourism is worth £114 billion to the economy, is twice the size of the IT services sector and four times the size of the agriculture sector, but it does not get the attention it deserves. It sustains more than 2.6 million jobs and is responsible for one in every four new jobs created here in the UK. It is worth our attention because every pound that Visit Britain spends abroad brings £25 back into the economy. How many other departments can say that their spending money in that way brings money back into this country's Exchequer? I want more emphasis on how we can take advantage of that.
	The UK is the sixth most popular place to visit in the world, but this Government do not recognise that. They have just cut Visit Britain's budget by 20 per cent., which is a scandal. There is no leadership in the Department for Culture, Media and Sport. Regulations are created in other Departments, but the DCMS has no say at all. Visa costs went up by £130 per cent., and DCMS had no say in the matter. Fire regulations are hitting bed and breakfasts hard; DCMS had no say in the matter.
	I think that it is page 8 of the Red Book that shows that there is to be a removal of tax relief on holiday lets; that was done without any consultation with DCMS whatever. We have no idea what the impact will be on the industry, and how many holiday lets will close. The measure will, of course, affect places such as Fowey in Cornwall, where I spent a week during the recess. If those places close, it means a loss not just to the individual who provides the let, but to local pubs, the local community, and the tourism operations there.
	There is also the issue of structures. The creation of the regional development agencies has taken responsibility for tourism away from a body with a national voice, such as Visit England, and given it to the nine regions, which ended up competing with each other in a confusing and overlapping system. The irony is that the Government have now realised that and are reinvigorating Visit England, but it is a decade too late.
	There is not enough time to do justice to other issues, including the closure of 36 pubs every single week. The increase in duties is a tax on the many, not the few who drink irresponsibly. The VAT reduction to 15 per cent. was not helpful at all, because people in the retail and tourism sectors were already giving 10, 15 and 20 per cent. discounts. Why on earth are the Government changing VAT back to 17.5 per cent. on 31 December, at the end of this year? I do not understand that, and I hope that the Treasury Ministers on the Government Bench will take this issue away and consider it. That has to be the busiest period for any bar, pub or club, or any retail outlet. I ask the Government to take a look at that, and to shift the change to a different day.
	There was reference in the Budget to bingo; VAT on bingo has now been removed. That has long been called for, but what the Government give with one hand, they take away with the other, as gross profits tax has gone up to 22 per cent. That means that bingo clubs will start closing across the UK. The dear old ladies who like their one night out will have nowhere to go. Bingo halls are part of our community. People who choose to take part in soft gambling may migrate to harder forms of gambling. That cannot be good, so I ask the Government to reconsider that. There is also the issue of what to do with regard to the announcements on swine flu. I just want to show the House the  Evening Standard . It says: "Killer flu virus 'already circulating in London'". That does not help British tourism at all.

Mr. Deputy Speaker: rose—

Tobias Ellwood: I knew that I was going to get into trouble.

Mr. Deputy Speaker: Order. Visual aids are strongly discouraged in the Chamber.

Tobias Ellwood: That is exactly why I read the headline out. I thought that I would get away with that. That story is in the  Evening Standard tonight, and it is a disgrace that there is such speculation, without any knowledge behind it. It is just scaremongering, and does nothing to help British tourism whatever.
	In conclusion, this is the worst Budget imaginable at the worst of times. In the end, it was more about partisan politics than responsible Government. It was a tribal Budget, with its flagship policy of a 50p tax rate—a crude attempt to corner the Conservatives and shore up Labour support rather than care for the nation's finances. The Government are not on the back foot, but on their knees searching in the gutter for ideas, as the disgraced Damian McBride proved only last week. The Government blame the US, but it is not the US that is responsible for 120 per cent. mortgages here, or indeed for easing the borrowing rules introduced more than a decade ago.
	It is said that Governments often reach their sell-by date, and that the nation simply wants a change, and if we are honest, that could be said about 1997, but the difference between John Major's Government and the Government of today is that we looked after the economy right up to the end date, and we handed over something worth talking about—something that we can actually be proud about. What is happening here is exactly the opposite. Today's Government seem to be out of touch, and are certainly out of ideas. They are going down, and attempting to drag the country with them. If there was one ounce of honour left in the new Labour project, the Government would fall on their sword and allow the nation the chance to vote and put the country out of its misery. This discredited Administration will selfishly limp on until May 2010, when finally the curtain will come down on a Government who have refused to apologise for their part in Britain's economic downturn, and who have no idea how to get us out of it.

Philip Hammond: As many of my hon. Friends have pointed out, we have scarcely reached the end of the Budget debate, and already its subject has fallen part. After four days of parliamentary scrutiny, the Chancellor's Budget, which was flimsy when it was delivered, has comprehensively unravelled. It is already looking as fanciful as the pre-Budget report quickly became. The past week has seen the final nail in the coffin of what little remained of Labour's economic credibility. Within minutes of the Chancellor sitting down, his growth forecasts were flatly contradicted by the International Monetary Fund, and his Budget was condemned by the CBI as lacking a "credible and rigorous" plan to restore the public finances.
	Within days, the first quarter growth showed the economy contracting far faster than the Chancellor indicated in his Budget statement, undermining the foundations on which the entire Budget was constructed. The right hon. Member for Neath (Mr. Hain), who is no longer in the Chamber, said that the growth predictions were lower than the Chancellor had predicted five months ago. In fact, they were lower than the Chancellor had predicted two days ago. I was struck—and I suspect that many of my colleagues were, too—by the tone of Labour Members' speeches this evening. They just do not seem to have grasped the implications of the Red Book for future spending, or the fact that it is already obsolete, reflecting, just a week after the Budget, a best-case outcome if economic recovery is far quicker and stronger than the IMF and all other reputable commentators have predicted.
	I was asked on Sunday whether I had any idea how the Chancellor had arrived at his 3.5 per cent. growth prediction for 2011. I think I do. My very first boss showed me something that he called the "right-hand up" budgeting approach. He started in the bottom right-hand corner of the spreadsheet with the number he wanted to reach, and he worked up to the top left-hand corner, filling in the numbers that he needed to get the answer he wanted. It is an exercise in fantasy forecasting that undermines not only the robustness of the Budget but the credibility of the entire process. The case for an independent office of Budget responsibility, proposed by my hon. Friend the shadow Chancellor, has never been made more eloquently than by the Chancellor himself in presenting those fantasy forecasts last week.
	What the country needed last Wednesday was a clear, objective and realistic statement of the position that we are in and a deliverable projection of future growth and revenue—a Budget that set out the measures needed to restore the public finances from that real base, not from fantasy figures, restoring a discipline to fiscal policy making that has sadly evaporated. What we got was a Budget that had more to do with saving the Prime Minister than with saving the British economy. As usual, it was based on spin.
	The story of the day was supposed to be the new 50 per cent. tax rate, signalling not just the casual breaking of another manifesto pledge, like the pledge to hold a referendum on the European constitution, but a final ritual burial of the new Labour project. If new Labour was about anything, it was about reaching out beyond its traditional core support to a wider public in an aspirational nation. It speaks volumes about the Prime Minister that, facing a general election that will be a referendum on his competence and record in managing the British economy, he has abandoned any attempt at broad appeal, and has refocused his efforts on his core heartland vote, chucking a bit of red meat to those who despise aspiration and success, revealing as much about himself, his values and priorities, as a clutch of unauthorised biographies could ever do.
	We know that the Prime Minister is obsessed with political dividing lines, and the 50p tax rate was supposed to be a new one. He needed it, because the old one—public spending and investment—was rubbed out when his Chancellor announced the most swingeing real-term cuts in public spending since the second world war. We can probably imagine the scene in the Downing street bunker: things are pretty tense in there anyway—a week or so ago, they had to take one of their own outside and shoot him. Those who are left are understandably nervous. The Secretary of State for Children, Schools and Families, normally a key player, has to keep his head below the parapet, lest someone derails his plans by reminding the electorate that he is in fact the co-author of the Prime Minister's 1,000-year plan for the British economy that has failed so spectacularly.
	A new dividing line was called for, and one was found—no matter that it will damage the British economy; no matter that it will cost jobs in the upturn; no matter the signal that it will send to the next generation of entrepreneurs and inward investors; no matter that the experts do not believe that it will raise anything like the sums of money that the Chancellor is pretending. As the right hon. Member for North Tyneside (Mr. Byers) said yesterday, this so-called policy is mostly about
	"political positioning and tactical manoeuvring"—[ Official Report, 27 April 2009; Vol. 491, c. 615.]
	The subliminal message is supposed to be, "We've got you in a mess, but don't worry. We'll sort it out by taxing the rich." But the British people are not stupid. They have been here before. They know it does not work like that. If one studies the Budget book closely, one sees that it does not even pretend that it works like that, either in the bits that the Chancellor told us about last Wednesday or in the bits that he did not tell us about. In the bit that he told us about, only half the tax increases are paid for by the rich.
	The other half are taxes on ordinary families—on alcohol, tobacco and fuel and, of course, the stupidest tax of all, on jobs, which is the national insurance contribution increase in 2011 that will hit everybody earning £20,000 a year or more, just as the economy is starting to grow again. In the bit of the Budget that the Chancellor did not tell us about, there are another £45 billion a year of tax increases pencilled in to make his numbers add up by 2017, even with his highly optimistic growth assumptions. That is £1,430 per family of extra tax every year for every family in Britain—a secret Labour tax bombshell aimed at the many, not the few, and timed to go off after the next general election.
	Maybe the Chancellor was a little pushed for time when he was making his Budget statement. He seemed to gloss over the dramatic changes in spending plans in his Budget speech. The downgraded spending growth assumption from 1.1 per cent. to 0.7 per cent. was announced without any fanfare. There was no mention, either, of the allocation of £2.3 billion of cuts to the NHS next year, or of the halving of net public capital investment over the next five years—something that Labour have consistently said they would not do in response to economic pressure.
	Let me remind my right hon. and hon. Friends that at the time of the 2005 general election, when the Conservatives were already warning that public spending was growing too fast and needed to be restrained, the Prime Minister told the country that every conceivable efficiency saving had already been made, and that any further reduction in public spending growth would lead to a catastrophic collapse in front-line services. Since that election, he claims to have made £26 billion in efficiency savings. Last November he discovered another £5 billion-worth and, last week, he told us that he had found another £9 billion. That is £40 billion in total.
	Let me remind the House what the present Chancellor said back in 2005:
	"Far from being able to fund such huge cuts in 'bureaucracy', £35 billion is actually the equivalent of sacking every teacher, every GP and every nurse in the country",
	yet he has done it, and then some, so he claims. No one believes a word the Government say on spending any more. It is pure political spin. If they had taken our advice then, the public finances would not be in the mess they are in now, and our public services would be more robust, more sustainable and better prepared for the challenges that they will face.
	The truth, which we did not hear in the Budget statement, but had to glean from the analysis of the Institute for Fiscal Studies, is that after taking into account the increase in the service cost of our mountain of debt and the additional cost of benefits to those caught up in this recession, the Chancellor's figures presented last Wednesday represent a real cut of 2.3 per cent. in departmental expenditure budgets after 2011—the biggest spending cut that has ever been imposed in Britain's post-war history. All in all, it was the most dishonest and most partisan Budget that we have yet seen from the Government, and it beat off some competition to win that title.
	The Government talk about fiscal stimulus and counter-cyclical policies, but the only cycle that the Prime Minister has ever understood is the electoral cycle, and that has been the driver of this Budget: a crowd-pleasing, economy-damaging increase in tax on the few before an election; a hidden tax bombshell targeted at the many after an election; a huge increase in public spending before the election; a real-terms cut in departmental spending, on a scale never before seen, after the election. It is not about the economy; it is about the election.
	In my winding-up speech on the Budget last year, I reminded the House that the Prime Minister, when he was Chancellor, used to like to amuse audiences with the thought that there were just two types of Chancellor: those who failed and those who got out early enough. He clearly thought, as he left No. 11 in the summer of 2007, that he was safely in the latter category, but, as his legacy crumbles around him, the British public can now see that he is not only firmly in the former category, but in a sub-class of spectacular and cataclysmic failure all of his own.
	This Government inherited the best economic legacy of any Government since the war.  [ Interruption. ] Oh yes they did. Every single economic indicator was set to positive in 1997, yet they will leave to their successors the worst economic situation since the great depression—worse, even, than the carnage of 1979. The Prime Minister, the man who single-handedly managed the British economy for a decade and, as I remember, was happy enough to take the credit for it when it was going well, is responsible for turning that golden legacy into this disaster. It was he, aided and abetted by the Secretary of State for Children, Schools and Families, who was responsible for the failed system of regulation that prevented the Bank of England calling time on debt, and who let our banks and our households borrow too much; it was he who failed to prepare Britain for the recession, so that we entered it with the highest public sector deficit of any major industrial nation; and it was he who failed spectacularly to deliver the solutions that the nation needs to address the challenges that we now face.
	This is probably the penultimate Budget of this bankrupt Government. They are an economically bankrupt Government, borrowing more than £1 of every £4 that they spend, and presiding over the worst recession and biggest deficit that this country has ever seen, with, according to the CBI, no credible or rigorous plan to restore the public finances. They are a morally bankrupt Government, with a vicious culture of spin, manipulation and sleaze—dodging the truth, postponing the pain and putting off until after the election what for Britain's sake needs doing today. They are inward-looking and focused on saving their own skin at all costs. They said that this Budget was about jobs. Correction: it is about a job. When the Prime Minister talks about his priorities, we know exactly what they are.
	They are an intellectually bankrupt Government, too, because the Prime Minister's only policy, his only solution to every problem, has been to throw more money at it. Any fool can spend money and, to be fair, cut budgets, but, now that the cupboard is bare and the country must start living within its means, the challenge for policy makers is to do things smarter rather than simply to spend more public money. That leaves the Prime Minister devoid of answers to the challenges of the future.
	This Budget was a final opportunity for the Government to level with the British people about the scale of the problems that the country faces, and to set out a clear, credible and rigorous plan for addressing them, but they fudged it. They spun it. Within minutes, the assumptions on which the Budget is constructed were discredited; within days, it had completely unravelled to expose how they have ducked the real challenges. It is now clear that they will carry on playing their political game until finally their time runs out and this unelected, failed Prime Minister can be put out of his misery by the British electorate. Then Britain can start the long process of rebuilding its economy and its public finances and of putting this country back on the path to sustainable prosperity.

Yvette Cooper: We have had four days of debate on Budget measures. We heard from my right hon. Friends the Members for Coatbridge, Chryston and Bellshill (Mr. Clarke) and for Neath (Mr. Hain) about the importance of not returning to the policies of the 1980s, which had such devastating consequences for Britain. We heard from the hon. Members for Gainsborough (Mr. Leigh) and for Belfast, North (Mr. Dodds), who talked about the importance of efficiency savings; many of the kinds of things they mentioned are under way as a result of the operational efficiency review. We heard from my hon. Friend the Member for City of Durham (Dr. Blackman-Woods), and from the hon. Members for Hornsey and Wood Green (Lynne Featherstone) and for Foyle (Mark Durkan), about the value of support for those who are losing their jobs. We heard, too, from the hon. Members for Wimbledon (Stephen Hammond), for Bournemouth, East (Mr. Ellwood) and for South Holland and The Deepings (Mr. Hayes), who argued for the importance of public spending cuts.
	We hold this debate at a difficult time for the British economy and the world economy. For the first time since the second world war, the economy of the entire world is shrinking. Many of the biggest banks in the world have had to be rescued by their national Governments. World trade has dropped. By the end of last year, the German economy had shrunk by 3.1 per cent., the Japanese economy by 4.6 per cent., and the UK economy by 2.3 per cent. The world stock market is down £30 trillion from its peak in 2007. So, as we agreed at the G20 summit, it is vital that every Government act to support their economy through a difficult time. That is why this Budget sets out further measures to help those who lose their jobs, to help those fearful of losing their homes, to help businesses struggling to invest, and to help savers affected by interest rate reductions—all measures to support the economy at a difficult time. My right hon. Friend the Secretary of State for Work and Pensions set out proposals for £5 billion of extra investment to help the unemployed: extra help and advice; extra training places; golden hellos for employers who take someone on; and now a jobs guarantee backed by 250,000 new jobs. I think that those are the most important measures in the Budget, because we should never go back to the travesty of long-term youth unemployment that we saw in the 1980s.
	Before today's debate I had assumed from the statements of Conservative Front Benchers that they opposed the extra help for the unemployed, but the right hon. Member for Maidenhead (Mrs. May) said that she supported it. As we made clear, this is £5 billion of extra spending over this year and next, paid for primarily by additional short-term borrowing; it is part of the fiscal stimulus. Again, I give her an opportunity to tell the House whether she supports the extra investment for the unemployed and has done a U-turn on the fiscal stimulus, or opposes the additional £5 billion of investment over the next two years to support the unemployed. I give Conservative Front Benchers the opportunity to intervene—Back Benchers may also want to do so—to tell us whether they support the £5 billion of additional investment to help the unemployed. The right hon. Lady said that she did, yet the shadow Chancellor has said that he does not. Do they support extra investment to support the unemployed, or not? Do they support the fiscal stimulus, or not?  [ Interruption. ] They are saying that it is not £5 billion. We have set out £5 billion of additional spending over this year and next as part of the pre-Budget report, and yet Conservative Members refuse to support it.
	Let us turn to business, where the same question applies. The shadow— [ Interruption. ]

Mr. Speaker: Order. The Chief Secretary should be allowed to address the House properly.  [ Interruption. ] Order. Far too many right hon. and hon. Members are interfering.

Yvette Cooper: I have offered Opposition Members the opportunity to get to their feet and tell me what their policy is, but they repeatedly refuse.
	I shall set out the issue for business. As part of the Budget, we have set out additional capital allowances for business. The right hon. and learned Member for Rushcliffe (Mr. Clarke), the shadow shadow Chancellor, said in yesterday's debate that he agreed with those measures, but they, too, are part of the fiscal stimulus, funded by more than £1 billion of extra borrowing this year. We will get extra revenue in future years as a result.
	Do the Opposition support those tax allowances and the extra funding for business, or would they prefer the shadow Chancellor's approach? He has argued that in fact we should cut such tax allowances and make it harder for businesses to invest in the future. No Opposition Member will tell us what they think about policies to help the unemployed and businesses. Those are the measures in our Budget that we are debating today, and the Opposition have refused to support them. They refuse to support the economy through a downturn and a recession, and they refuse to back the additional support that the economy needs.
	The Budget also set out extra help for families, savers and pensioners, and of course we have the sustained cut in VAT. The hon. Member for Twickenham (Dr. Cable) has opposed that, yet independent economists are now saying that it is working to support the economy and retail sales. The total fiscal stimulus is likely to reduce the drop in national income by 0.75 per cent, yet Opposition Members have opposed that action to reduce the severity of the recession.
	Alongside the action on interest rates and the action to safeguard people's savings in the banking system and get banks lending again, those measures are supporting more than 500,000 jobs, but again, the Conservatives are opposing that. When we debated the last Budget 12 months ago, their soundbite of the month was that they wanted a Government who got off people's backs. It turns out that they wanted a Government who turn their back, just as their party did in the '80s and '90s.
	The right hon. and learned Member for Rushcliffe argued yesterday that we could not afford to support the economy in this way. The truth is that we cannot afford not to. If we do not take action now, this recession will run longer and deeper, push debt up higher and cost us all more in the long run. The Nobel prize-winning economist Paul Krugman has said:
	"The bottom line, then, is that people who think that fiscal expansion today is bad for future generations have got it exactly wrong. The best course of action, both for today's workers and for their children, is to do whatever it takes to get this economy on the road to recovery."
	We can afford to support the economy right now, because our public sector debt when the credit crunch hit was one of the lowest in the G7. That is why the IMF said:
	"Some countries entered the crisis with greater fiscal space to expand, including more favorable levels of deficits, public debt contingent liabilities and interest rates (Canada, China, France, Germany, the UK and the US)".
	But yes, public finances are being affected here, as they are across the world. Tax revenues from the City have been particularly hit, but we have automatic strong support for families during an economic downturn built into our tax credit and welfare system.
	The IMF forecast, on which Opposition Members are so keen, is still that UK public sector debt, when it is at its highest level in a few years, will be below that of Germany and the US, significantly below that of Japan and Italy and only slightly higher than that of France. Every one of those countries is backing increased Government action to support their economies right now, because they know, as we know, that we cannot cut our way out of recession. We have to invest and grow our way through a downturn such as this.
	There is a clear choice. The Conservatives are offering a very different approach to recession. Not only are they opposing all the extra support to help our economy recover, they want to go further and make cuts in the budgets with which public services are operating right now. The right hon. Member for Witney (Mr. Cameron) has said:
	"We have said that the government should have come off its spending plans in 2009 and 2010, that they've got to make a start in reducing this deficit."
	It is time that the Conservatives told us what their plans for this year and next would really mean. They previously told us that they wanted £5 billion of cuts in the budgets that people are already spending this year. On Wednesday, the hon. Member for Runnymede and Weybridge (Mr. Hammond) said that they would deliver £6 billion more in 2010. On Sunday, his party leader said:
	"They've just announced a spending increase... of £20 billion for next year."
	He later said,
	"and now we're saying they should abandon their irresponsible plan to increase spending in 2010."
	So which is it—£5 billion, £6 billion, £20 billion? The shadow Chief Secretary should watch out; his figures look positively profligate compared with those of his boss.
	However, Conservative Members have never said where any of the savings would come from. They say the NHS computer, yet they have admitted that there are no savings to be found. They say ContactPoint, yet that recommendation of the Laming review costs £40 million to run and saves more than £80 million across services. They say tax credits for households on over £50,000, but that includes couples, both on the average wage, who form 0.2 per cent. of the tax credit bill—less than £40 million. That is not £5 billion of cuts, but tinkering. Again, Conservative Members play hide and seek and do not tell people where their axe would fall.
	The Conservatives were a bit more open in February when they described specific restrictions on departmental budgets. Housing would lose £810 million in the middle of a recession, and education and training would lose £910 million this year—equivalent to cutting 220,000 apprenticeships now. That is economic madness. It is economically dangerous, not just today, but for the future. Such cuts would not only delay recovery, but push up the bills of recession and leave the Conservatives making even more cuts in future.
	There will be tough choices for the future. The Budget sets out plans to halve borrowing over four years, because we need it to decrease, and we need those on the highest incomes to pay more. That is a fair way in which to help reduce borrowing. Public spending budgets will be tighter, which means setting priorities, and we will do that as part of the spending review. However, we have been clear: we will continue to support front-line services and we believe that it is right to reduce borrowing step by step, steadily as the economy grows, precisely so that we can continue to safeguard public services for the future. It is not the shock and awe approach of the Conservative party, which appears to want immediate cuts in borrowing and public services.
	In the four-day debate, some Conservative Back Benchers have been literally salivating at the prospect of spending cuts. So much for modern, compassionate Conservatism and backing investment in public services. The right hon. Member for Witney has let the dogs off the leash and they are slavering for the flesh of the NHS. There are serious choices to make and the Conservatives are making different choices. We should listen to the glee with which the right hon. Gentleman calls for austerity. For whom does he want austerity? He wants austerity for public services and couples on the average wage who get tax credits, but not for the millionaires, whose tax increases he wants reviewed. He wants no austerity for millionaires' estates, to which he would give more money. Three thousand of the richest estates in the country would get an average of £200,000 each. At the weekend, the right hon. Gentleman said, "that will be done."
	Conservatives say that the economic circumstances are so severe that they must ditch their plans to support our investment in public services. Yet the economic circumstances are clearly not sufficiently severe for them to drop their commitment to tax breaks for millionaires. That is shocking—a shocking set of priorities from the Conservative party, which would rather defend tax breaks for millionaires' estates than public services. They would rather cut investment in apprenticeships and housing in the middle of a recession than support action to help the unemployed and people who need our help now, so that we can get through the recession faster, come through it stronger and build for recovery.
	We have set out our Budget for the future and plans not only to help the British economy through the world recession, but to build for the long term.
	I commend the Budget to the House.
	 Question put and agreed to.
	 Resolved,
	That,—
	(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.
	(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—
	(a) for zero-rating or exempting a supply, acquisition or importation,
	(b) for refunding an amount of tax,
	(c) for any relief, other than a relief that—
	(i) so far as it is applicable to goods, applies to goods of every description, and
	(ii) so far as it is applicable to services, applies to services of every description.
	 The Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).

2. INCOME TAX (CHARGE AND MAIN RATES FOR 2009-10)

Resolved,
	That—
	(1) Income tax is charged for the tax year 2009-10.
	(2) For that tax year—
	(a) the basic rate is 20%, and
	(b) the higher rate is 40%.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

3. INCOME TAX (BASIC RATE LIMIT FOR 2009-10)

Resolved,
	That—
	(1) For the tax year 2009-10 the amount specified in section 10(5) of the Income Tax Act 2007 (basic rate limit) is replaced with "£37,400".
	(2) Accordingly, section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.
	(3) This Resolution does not require a change to be made in the amounts deductible or repayable under PA YE regulations before 18 May 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

4. INCOME TAX (PERSONAL ALLOWANCE FOR 2009-10 FOR THOSE AGED UNDER 65)

Resolved,
	That—
	(1) For the tax year 2009-10 the amount specified in section 35 of the Income Tax Act 2007 (personal allowance for those aged under 65) is replaced with "£6,475".
	(2) Accordingly, section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35 of that Act, does not apply for that tax year.
	(3) This Resolution does not require a change to be made in the amounts deductible or repayable under PAYE regulations before 18 May 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

5. CORPORATION TAX (CHARGE AND MAIN RATES FOR FINANCIAL YEAR 2010)

Question put,
	That—
	(1) Corporation tax is charged for the financial year 2010.
	(2) For that year the rate of corporation tax is—
	(a) 28% on profits of companies other than ring fence profits, and
	(b) 30% on ring fence profits of companies.
	 The House proceeded to a Division.

Mr. Speaker: I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.

The House having divided: Ayes 302, Noes 243.

Question accordingly agreed to.

6. CORPORATION TAX (SMALL COMPANIES' RATES AND FRACTIONS FOR FINANCIAL YEAR 2009)

Question put,
	That—
	(1) For the financial year 2009 the small companies' rate is—
	(a) 21% on profits of companies other than ring fence profits, and
	(b) 19% on ring fence profits of companies.
	(2) For the financial year 2009 the fraction mentioned in section 13(2) of the Income and
	Corporation Taxes Act 1988 is—
	(a) 7/400ths in relation to profits of companies other than ring fence profits ("the standard fraction"), and
	(b) 11/400ths in relation to ring fence profits of companies ("the ring fence fraction").
	 The House divided: Ayes 301, Noes 243.

Question accordingly agreed to.

7. VALUE ADDED TAX (SUPPLEMENTARY CHARGE)

Resolved,
	That provision (including provision having retrospective effect) may be made for and in connection with a supplementary charge to value added tax on supplies spanning the date on which the standard rate of value added tax reverts to 17.5%.

8. STAMP DUTY LAND TAX (THRESHOLDS FOR RESIDENTIAL PROPERTY)

Resolved,
	That—
	(1) Part 4 of the Finance Act 2003 (stamp duty land tax) has effect in relation to transactions with an effective date on or after 22 April 2009 but before 1 January 2010 as if—
	(a) in section 55(2) (amount of tax chargeable: general), in Table A (bands and percentages for residential property), for "£125,000" (in both places) there were substituted "£175,000", and
	(b) in paragraph 2(3) of Schedule 5 (amount of tax chargeable: rent), in Table A (bands and percentages for residential property), for "£125,000" (in both places) there were substituted "£175,000".
	(2) The following are revoked—
	(a) the Stamp Duty Land Tax (Variation of Part 4 of the Finance Act 2003) Regulations 2008 (S.I. 2008/2338), and
	(b) the Stamp Duty Land Tax (Exemption of Certain Acquisitions of Residential Property) Regulations 2008 (S.I. 2008/2339).
	(3) The revocations made by paragraph (2) have effect in relation to transactions with an effective date on or after 22 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

9. RATES OF DUTY ON ALCOHOLIC LIQUOR

Question put ,
	That—
	(1) The Alcoholic Liquor Duties Act 1979 is amended as follows.
	(2) In section 5 (rate of duty on spirits), for "£21.35" substitute "£22.64".
	(3) In section 36(lAA)(a) (standard rate of duty on beer), for "£14.96" substitute "£16.47".
	(4) In section 62(1A) (rates of duty on cider)—
	(a) in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for "£188.10" substitute "£207.20",
	(b) in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for "£43.37" substitute "£47.77", and
	(c) in paragraph (c) (rate of duty per hectolitre in any other case), for "£28.90" substitute "£31.83".
	(5) For the table in Schedule 1 substitute—
	
		
			  Table of Rates of Duty on Wine and Made-wine 
			  Part 1 
			  Wine or Made-wine of a Strength not Exceeding 22 per cent. 
			  Description of Wine or Made- w ine  Rates of Duty per Hectolitre 
			   £ 
			 Wine or made-wine of a strength not exceeding 4 per cent. 65.94 
			 Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5.5 per cent. 90.68 
			 Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent. and not being sparkling. 214.02 
			 Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but less than 8.5 per cent. 207.20 
			 Sparkling wine or sparkling made-wine of a strength of 8.5 per cent. or of a strength exceeding 8.5 per cent. but not exceeding 15 per cent. 274.13 
			 Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent. 285.33 
		
	
	
		
			  Part 2 
			  Wine or Made-wine of a Strength Exceeding 22 per cent. 
			  Description of Wine or Made-wine  Rates of Duty per Litre of Alcohol in the Wine or Made-wine 
			   £ 
			 Wine or made-wine of a strength exceeding 22 per cent. 22.64 
		
	
	(6) The Alcoholic Liquor Duties (Surcharges) and Tobacco Products Duty Order 2008 (S.I. 2008/3026), so far as relating to excise duty on alcoholic liquors, and the Alcoholic Liquor (Surcharge on Spirits Duty) Order 2008 (S.I. 2008/3062) are revoked.
	(7) The amendments made by this Resolution come into force on 23 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
	 The House divided: Ayes 296, Noes 232.

Question accordingly agreed to.

10. RATES OF TOBACCO PRODUCTS DUTY

Resolved,
	That—
	(1) For the table in Schedule 1 to the Tobacco Products Duty Act 1979 substitute—
	
		
			  Table 
			 1. Cigarettes An amount equal to 24 per cent. of the retail price plus £114.31 per thousand cigarettes. 
			 2. Cigars £173.13 per kilogram 
			 3. Hand-rolling tobacco £124.45 per kilogram 
			 4. Other smoking tobacco and chewing tobacco £76.12 per kilogram 
		
	
	(2) The Alcoholic Liquor Duties (Surcharges) and Tobacco Products Duty Order 2008 (S.I. 2008/3026), so far as relating to excise duty on tobacco products, is revoked.
	(3) The amendments made by this Resolution come into force at 6 pm on 22 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

11. VEHICLE EXCISE DUTY (RATES FROM MAY 2009)

Resolved ,
	That—
	(1) Schedule 1 to the Vehicle Excise and Registration Act 1994 (annual rates of duty) is amended as follows.
	(2) In paragraph 1 (general)—
	(a) in sub-paragraph (2) (vehicle not covered elsewhere in Schedule otherwise than with engine cylinder capacity not exceeding l,549cc), for "£185" substitute "£190", and
	(b) in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding l,549cc), for "£120" substitute "£125".
	(3) In paragraph IB (graduated rates for light passenger vehicles), for the table substitute—
	
		
			  Table 
			  CO 2  Emissions Figure  Rate 
			  (1)  (2)  (3)  (4) 
			  Exceeding  Not Exceeding  Reduced Rate  Standard Rate 
			  g/km  g/km  £  £ 
			 100 120 15 35 
			 120 140 100 120 
			 140 150 105 125 
			 150 165 130 150 
			 165 185 155 175 
			 185 225 200 215 
			 225 - 390 405 
		
	
	The table has effect in relation to vehicles first registered under this Act before 23 March 2006 as if—
	(a) in column (3), in the last row, "200" were substituted for "390", and
	(b) in column (4), in the last row, "215" were substituted for "405"."
	(4) In paragraph 1J (light goods vehicles)—
	(a) in sub-paragraph (a) (vehicle which is not lower-emission van), for "£180" substitute "£185", and
	(b) in sub-paragraph (b) (lower-emission van), for "£120" substitute "£125".
	(5) The amendments made by this Resolution have effect in relation to licences taken out on or after 1 May 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

12. VEHICLE EXCISE DUTY (RATES FROM APRIL 2010)

Resolved ,
	That provision may be made about the rates of vehicle excise duty on licences taken out on or after 1 April 2010.

13. FUEL DUTIES (RATES AND REBATES FROM SPRING 2009)

Question put,
	That—
	(1) The Hydrocarbon Oil Duties Act 1979 is amended as follows.
	(2) In section 6(1 A) (main rates)—
	(a) in paragraph (a) (unleaded petrol), for "£0.5235" substitute "£0.5419",
	(b) in paragraph (aa) (aviation gasoline), for "£0.3103" substitute "£0.3334",
	(c) in paragraph (b) (light oil other than unleaded petrol or aviation gasoline), for "£0.6207" substitute "£0.6391", and
	(d) in paragraph (c) (heavy oil), for "£0.5235" substitute "£0.5419".
	(3) In section 6AA(3) (rate of duty on biodiesel), for "£0.3235" substitute "£0.3419".
	(4) In section 6AD(3) (rate of duty on bioethanol), for "£0.3235" substitute "£0.3419".
	(5) In section 8(3) (road fuel gas)—
	(a) in paragraph (a) (natural road fuel gas), for "£0.1660" substitute "£0.1926", and
	(b) in paragraph (b) (other road fuel gas), for "£0.2077" substitute "£0.2482".
	(6) In section 11(1) (rebate on heavy oil)—
	(a) in paragraph (a) (fuel oil), for "£0.0966" substitute "£0.1", and
	(b) in paragraph (b) (gas oil), for "£0.1007" substitute "£0.1042".
	(7) In section 14(1) (rebate on light oil for use as furnace fuel), for "£0.0966" substitute "£0.1".
	(8) In section 14A(2) (rebate on certain biodiesel), for "£0.1007" substitute "£0.1042".
	(9) The amendments made by paragraph (2)(b) and (c) come into force on 1 May 2009.
	(10) The other amendments made by this Resolution are treated as having come into force on 1 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
	 The House divided: Ayes 333, Noes 183.

Question accordingly agreed to.

14. FUEL DUTIES (RATES AND REBATES FROM SEPTEMBER 2009)

Resolved,
	That provision may be made amending rates of duty and rebates in the Hydrocarbon Oil Duties Act 1979 from 1 September 2009.

15. RATES OF AIR PASSENGER DUTY

Resolved,
	That provision may be made about rates of air passenger duty.

16. LANDFILL TAX

Resolved,
	That provision may be made about landfill tax.

17. BINGO DUTY

Resolved,
	That—
	(1) The Betting and Gaming Duties Act 1981 is amended as follows.
	(2) In section 17(l)(b) (bingo duty chargeable at 15 per cent of bingo promotion profits), for "15" substitute "22".
	(3) In paragraph 5(2)(c) of Schedule 3 (maximum prize for small-scale amusements exemption), f or "£50" substitute "£70".
	(4) The amendment made by paragraph (2) has effect in relation to accounting periods beginning on or after 27 April 2009.
	(5) The amendment made by paragraph (3) has effect in relation to bingo played on or after 1 June 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

18. AMUSEMENT MACHINE LICENCES (AMOUNTS OF DUTY)

Resolved,
	That—
	(1) In section 23(2) of the Betting and Gaming Duties Act 1981 (amount of duty payable on amusement machine licence), for the table substitute—
	
		
			  Table 
			  Months for Which Licence Granted  Category A  Category B1  Category B2  Category B3  Category B4  Category C 
			   £  £  £  £  £  £ 
			 1 500 255 200 200 480 80 
			 2 985 490 385 385 350 145 
			 3 1475 735 585 585 530 220 
			 4 1965 985 775 775 705 290 
			 5 2465 1230 970 970 875 365 
			 6 2955 1475 1160 1160 1050 435 
			 7 3445 1720 1355 1355 1225 505 
			 8 3935 1965 1550 1550 1405 580 
			 9 4430 2215 1745 1745 1580 655 
			 10 4920 2465 1935 1935 1755 725 
			 11 5410 2710 2130 2130 1930 795 
			 12 5625 2815 2215 2215 2010 830 
		
	
	(2) The amendment made by paragraph (1) has effect in relation to cases where the application for the amusement machine licence is received by the Commissioners for Her Majesty's Revenue and Customs after 4 pm on 22 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

19. AMUSEMENT MACHINE LICENCES (PROVISIONS AFFECTING AMOUNT OF DUTY)

Resolved,
	That—
	(1) The Betting and Gaming Duties Act 1981 is amended as follows.
	(2) Section 21 (gaming machine licences) is amended as follows.
	(3) Subsection (5) (excepted machines) is amended as follows.
	(4) In paragraph (c) (machines in case of which cost of single game does not exceed lOp and maximum value of prize for winning single game does not exceed £5)—
	(a) in sub-paragraph (i), omit the "and" at the end,
	(b) in sub-paragraph (ii), for "£5" substitute "£15", and
	(c) after that sub-paragraph insert—
	"(iii) the maximum cash component of the prize for winning a single game does not exceed £8,".
	(5). After that paragraph insert—
	"(ca) a gaming machine in respect of which—
	(i) the cost of a single game does not exceed £1,
	(ii) the maximum value of the prize for winning a single game does not exceed £50, and
	(iii) any prize that can be won is neither money nor something that can be exchanged for or used in place of money or that can be exchanged for something other than money, and".
	(6). After that subsection insert—
	"(6) To the extent that a prize consists of anything other than money, its value for the purposes of this section and sections 22 and 23 below is—
	(a) in the case of a voucher or token that may be exchanged for, or used in place of, an amount of money, that amount,
	(b) in the case of a voucher or token that does not fall within paragraph (a) and that may be exchanged for something other than money, the cost that the person providing the machine would incur in obtaining that thing from a person who is not a connected person, and
	(c) in any other case, the cost that the person providing the machine would incur in obtaining the prize from a person who is not a connected person.
	(7) Section 839 of the Income and Corporation Taxes Act 1988 (connected persons) applies for the purposes of subsection (6)."
	(7) In section 22(2) (machine in respect of which benefits for winning single game do not exceed £8 to be "small-prize machine"), for "£8" substitute "£10".
	(8) Section 23 (amount of duty) is amended as follows.
	(9) In subsection (3) (categories of machines), in the definition of Category C gaming machine, in paragraph (ii)—
	(a) for "50p" substitute "£1", and
	(b) for "£35" substitute "£70".
	(10) Omit subsection (5) (which is superseded by the amendment made by paragraph (6))-
	(11) In consequence of the amendments made by the preceding provisions of this Resolution, omit—
	(a) paragraph 3(1 )(b) of Schedule 2 to the Finance Act 2000, and
	(b) section 9(2) and (4) of the Finance Act 2007.
	(12). The amendments made by this Resolution come into force on 1 June 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

20. EXTENSION OF LOSS CARRY BACK PROVISIONS (INCOME TAX)

Resolved,
	That—
	(1) A person who has made a loss in a trade in the tax year. 2008-09 or 2009-10 may make a claim for relief under this Resolution if—
	(a) relief is available to the person under section 64 of the Income Tax Act 2007 (trade loss relief against general income) in relation to an amount of the loss ("the section 64 amount"), and
	(b) condition A or B is met.
	(2) Condition A is that the person makes a claim under that section for relief in respect of the section 64 amount—
	(a) where it is a loss made in the tax year 2008-09, for either or both of the tax years 2007-08 and 2008-09, or
	(b) where it is a loss made in the tax year 2009-10, for either or both of the tax years 2008-09 and 2009-10.
	(3) Condition B is that—
	(a) where it is a loss made in the tax year 2008-09, for the tax years 2007-08 and 2008-09, or
	(b) where it is a loss made in the tax year 2009-10, for the tax years 2008-09 and 2009-10,
	the person's total income is nil or does not include any income from which a deduction could be made in pursuance of a claim under that section for relief in respect of the section 64 amount.
	(4).The amount of the loss that may be relieved under this Resolution ("the deductible amount") is—
	(a).in a case where condition A is met, so much of the section 64 amount as cannot be relieved pursuant to the claim under section 64 of the Income Tax Act 2007, and
	(b) in a case where condition B is met, the whole of the section 64 amount, (but see paragraph (12)).
	(5).A claim for relief under this Resolution is for the deductible amount to be deducted (in accordance with paragraph (6) and with whichever is applicable of paragraphs (7), (8), (9) and (10))—
	(a).where it is a loss made in the tax year 2008-09, in either or both of the following ways—
	(i) in computing the person's total income for either or both of the tax years 2005-06 and 2006-07 in accordance with section 835 of the Income and Corporation Taxes Act 1988, and
	(ii) in calculating the person's net income for the tax year 2007-08 in accordance with Step 2 of the calculation in section 23 of the Income Tax Act 2007 (which applies as if this Resolution were a provision listed in section 24 of that Act), or
	(b) where it is a loss made in the tax year 2009-10, in either or both of the following ways—
	(i) in computing the person's total income for the tax year 2006-07 in accordance with section 835 of the Income and Corporation Taxes Act 1988, and
	(ii) in calculating the person's net income for either or both of the tax years 2007-08 and 2008-09 in accordance with Step 2 of the calculation in section 23 of the Income Tax Act 2007 (which applies as if this Resolution were a provision listed in section 24 of that Act).
	(6) A deduction is to be made only from profits of the trade (and accordingly, in relation to the tax years 2007-08 and 2008-09, subsection (2) of section 25 of the Income Tax Act 2007 has effect as if this paragraph were included in subsection (3) of that section).
	(7) This paragraph explains how the deductions are to be made in a case where the loss is made in the tax year 2008-09 and the person makes a claim under section 64 of the Income Tax Act 2007 for relief in respect of the section 64 amount for the tax year 2007-08.
	 Step 1
	Deduct the deductible amount from the profits of the trade for the tax year 2006-07.
	 Step 2
	Deduct from the profits of the trade for the tax year 2005-06 so much of the deductible amount as has not been deducted under Step 1.
	(8).This paragraph explains how the deductions are to be made in any other case where the loss is made in the tax year 2008-09.
	 Step 1
	Deduct the deductible amount from the profits of the trade for the tax year 2007-08.
	 Step 2
	Deduct from the profits of the trade for the tax year 2006-07 so much of the deductible amount as has not been deducted under Step 1.
	 Step 3
	Deduct from the profits of the trade for the tax year 2005-06 so much of the deductible amount as has not been deducted under Step 1 or 2
	(9) This paragraph explains how the deductions are to be made in a case where the loss is made in the tax year 2009-10 and the person makes a claim under section 64 of the Income Tax Act 2007 for relief in respect of the section 64 amount for the tax year 2008-09.
	 Step 1
	Deduct the deductible amount from the profits of the trade for the tax year 2007-08.
	 Step 2
	Deduct from the profits of the trade for the tax year 2006-07 so much of the deductible amount as has not been deducted under Step 1.
	(10).This paragraph explains how the deductions are to be made in any other case where the loss is made in the tax year 2009-10.
	 Step 1
	Deduct the  deductible amount from the profits of the trade for the tax year 2008-09.
	 Step 2
	Deduct from the profits of the trade for the tax year 2007-08 so much of the deductible amount as has not been deducted under Step 1.
	 Step 3
	Deduct from the profits of the trade for the tax year 2006-07 so much of the deductible amount as has not been deducted under Step 1 or 2.
	(11).The provision made by the preceding provisions means that the following sections of the Income Tax Act 2007 apply in relation to relief under this Resolution as in relation to relief under section 64 of that Act—
	(a).section 66 to 70 (restrictions on relief under section 64),
	(b) sections 74B to 74D (general restrictions on relief),
	(c) sections 75 to 79 (restrictions on relief under section 64 and early trade losses relief in relation to capital allowances),
	(d) section 80 (restrictions on those reliefs in relation to ring fence income), and
	(e) section 81 (restrictions on those reliefs in relation to dealings in commodity futures).
	(12) The total amount that may be deducted in accordance with paragraph (7), or in accordance with Steps 2 and 3 in paragraph (8), is limited to £50,000; and the total amount that may be deducted in accordance with paragraph (9), or in accordance with Steps 2 and 3 in paragraph (10), is also limited to £50,000.
	(13) A claim for relief under this Resolution must be made—
	(a) where the relief is in respect of a loss made in the tax year 2008-09, on or before the first anniversary of the normal self-assessment filing date for that tax year, and
	(b) where the relief is in respect of a loss made in the tax year 2009-10, on or before the first anniversary of the normal self-assessment filing date for that tax year.
	(14) This Resolution applies to professions and vocations as it applies to trades.
	(15) This Resolution is subject to paragraph 2 of Schedule IB to the Taxes Management Act 1970 (claims for loss relief involving 2 or more years).
	(16) Sections 61 to 63 of the Income Tax Act 2007 (meaning of "making a loss in a tax year" etc and prohibition against double counting) have effect as if this Resolution were included in Chapter 2 of Part 4 of that Act.
	(17) Subsections (1) to (3) of section 127 of that Act (UK furnished holiday lettings business treated as trade) have effect as if this Resolution were included in Part 4 of that Act.
	(18) The reference in paragraph 3(1) of Schedule 2 to the Social Security Contributions and Benefits Act 1992 and Social Security Contributions and Benefits (Northern Ireland) Act 1992 (levy of Class 4 contributions with income tax) to section 64 of the Income Tax Act 2007 includes this Resolution.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

21. EXTENSION OF LOSS CARRY BACK PROVISIONS (CORPORATION TAX)

Resolved,
	That—
	(1) Section 393A of the Income and Corporation Taxes Act 1988 (losses: set off against profits of same or earlier accounting period) has effect in relation to any loss to which this Resolution applies as if, in subsection (2) of that section, "3 years" were substituted for "twelve months" (but subject as follows).
	(2) This Resolution applies to any loss incurred by a company in a trade in a relevant accounting period (but subject to paragraph (3)); and a relevant accounting period is one ending after 23 November 2008 and before 24 November 2010.
	(3) The maximum amount of loss to which this Resolution applies in the case of any company is—
	(a) £50,000 in relation to losses incurred in relevant accounting periods ending after 23 November 2008 and before 24 November 2009, and
	(b) £50,000 in relation to losses incurred in relevant accounting periods ending after 23 November 2009 and before 24 November 2010;
	and the overall limit or limits apply whether a loss is incurred by the company in only one relevant accounting period or losses are so incurred in more than one such period.
	(4) Subject to that, if in the case of the company the length of a relevant accounting period is less than one year, the maximum amount of the loss incurred in that period that may be set off under section 393A of the Income and Corporation Taxes Act 1988 by virtue of this Resolution is the relevant proportion of £50,000.
	(5) "The relevant proportion" is—
	where—
	RAP is the number of days in the relevant accounting period, and Y is 365.
	(6) The reference in subsection (2C) of section 393A of the Income and Corporation Taxes Act 1988 to so much of the loss referred to in that subsection not falling within subsection (2B) of that section as does not exceed the amount of the allowance mentioned in subsection (2C)(b) ("the subsection (2C) loss") has effect in relation to a relevant accounting period as a reference to so much of the subsection (2C) loss as exceeds that which can be set off under section 393A of the Income and Corporation Taxes Act 1988 by virtue of this Resolution.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

22. AGREEMENTS TO FORGO TAX RELIEFS

Resolved,
	That provision (including provision having retrospective effect) may be made about agreements to forgo tax reliefs.

23. LAND REMEDIATION

Resolved,
	That provision may be made amending Part 14 of the Corporation Tax Act 2009.

24. CHARGEABLE GAINS

Resolved,
	That provision (including provision having retrospective effect) may be made amending, or making amendments connected with, the Taxation of Chargeable Gains Act 1992.

25. GROUP RELIEF

Resolved,
	That provision (including provision having retrospective effect) may be made about group relief.

26. EXPENDITURE ON CARS AND MOTOR CYCLES

Resolved,
	That provision (including provision having retrospective effect) may be made for and in connection with reliefs and allowances in respect of expenditure on cars and motor cycles.

27. PAYMENTS UNDER FSCS

Resolved,
	That—
	(1) Chapter 2 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (interest) is amended as follows.
	(2) In section 369(2) (list of provisions extending what is treated as interest for certain purposes), after "bonds)," insert—
	"section 380A (FSCS payments representing interest),".
	(3) After section 380 insert—
	 "380A  FSCS payments representing interest
	(1) Any payment representing interest which is made under the FSCS is treated as interest for the purposes of this Act.
	(2) "Payment representing interest" means a payment calculated in the same way as Interest which would have been paid to the recipient but for the circumstances giving rise to the making of payments under the FSCS.
	(3) Where a payment representing interest is made net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest, the amount treated as interest by this section is the aggregate of the payment representing interest and that sum.
	(4) This section applies to payments made under the FSCS whether or not they are made (in whole or in part) on behalf of the Treasury or any other person.
	(5) In this section "FSCS" means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000)."
	(4) In the Income Tax Act 2007, after section 979 insert—
	 "979A FSCS payments representing interest
	(1) This section applies where a payment is made under the FSCS representing interest net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest but for the circumstances giving rise to the making of payments under the FSCS.
	(2) A payment of the relevant gross amount is treated as having been made under the FSCS after there has been deducted from it a sum representing income tax of that amount.
	(3) That sum is accordingly taken into account under section 59B of TMA 1970 in determining the income tax payable by, or repayable to, the recipient.
	(4) "The relevant gross amount" means the aggregate of the amount of the payment representing interest which is made and that sum.
	(5) If the recipient requests it in writing, the scheme manager of the FSCS must provide the recipient with a statement showing—
	(a) the relevant gross amount,
	(b) the amount of the sum treated as deducted, and
	(c) the amount of the payment representing interest.
	(6) The duty to comply with a request under subsection (5) is enforceable by the recipient.
	(7) In this section—
	"FSCS" means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000), and
	"payment representing interest" has the same meaning as in section 380A of ITTOIA 2005."
	(5) The amendments made by this Resolution have effect in relation to payments made on or after 6 October 2008.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

28. COMPANY DISTRIBUTIONS

Resolved,
	That the provision may be made about the treatment for the purposes of corporation tax of dividends and other distributions.

29. FINANCING COSTS OF GROUP COMPANIES

Resolved,
	That provision may be made about the treatment for the purposes of corporation tax of financing costs of companies that are members of a group.

30. CONTROLLED FOREIGN COMPANIES

Resolved,
	That provision may be made about controlled foreign companies.

31. FOREIGN CURRENCY ACCOUNTING

Resolved,
	That provision (including provision having retrospective effect) may be made about foreign currency accounting.

32. OFFSHORE FUNDS

Resolved,
	That provision (including provision having retrospective effect) may be made about offshore funds and participants in offshore funds, including provision defining what is meant by an "offshore fund".

33. INCOME TAX CREDITS FOR FOREIGN DISTRIBUTIONS

Resolved,
	That provision may be made about income tax credits for foreign distributions.

34. LOAN RELATIONSHIPS AND DERIVATIVES

Resolved,
	That provision may be made for and in connection with the amendment of Parts 5, 6 and 7 of the Corporation Tax Act 2009.

35. DIVIDENDS OF INVESTMENT TRUSTS

Resolved,
	That provision may be made enabling dividends of investment trusts to be treated as payments of interest.

36. INSURANCE COMPANIES

Resolved,
	That provision (including provision having retrospective effect) may be made about insurance companies.

37. DISGUISED INTEREST

Resolved,
	That provision may be made about returns which are economically equivalent to interest.

38. TRANSFERS OF INCOME STREAMS

Resolved,
	That provision may be made about transfers of rights to receive income.

39. SAYE SCHEMES

Resolved,
	That—
	(1) Chapter 4 of Part 6 of the Income Tax (Trading and Other Income) Act 2005 (SAYE interest) is amended as follows.
	(2) In section 705 (certification of arrangements)—
	(a) in subsections (1) and (2), for "Treasury" (in each place) substitute "Commissioners", and
	(b) after subsection (4) insert—
	"(5) In this Chapter "the Commissioners" means the Commissioners for Her Majesty's Revenue and Customs."
	(3) In section 706(1) and (2) (withdrawal and variation of certifications etc), for "Treasury" substitute "Commissioners".
	(4) In section 707(1) (authorisation of providers), for "Treasury" substitute "Commissioners".
	(5) In section 708 (withdrawal and variation of authorisations)—
	(a) in subsections (1) and (2), for "Treasury" substitute "Commissioners", and
	(b) in subsection (4), for "Treasury of its" substitute "Commissioners of their".
	(6) In the following provisions omit "by post"—
	(a) section 706(2)(b) (notification of withdrawal and variation of certifications etc), and
	(b) section 708(2)(b) (notification of withdrawal and variation of authorisations).
	(7) In section 706(2)(b) (notification of withdrawal and variation of certifications etc) for "28 days" substitute "15 days".
	(8) In section 706(3) (transitional provision for withdrawals and variations of certifications) for the words from "the operation of to the end substitute—
	"(a) the operation of the arrangement concerned before that date,
	(b) contracts made under that arrangement before that date, or
	(c) where the notice so provides, contracts which are of a description specified in the notice and are made under that arrangement after that date."
	(9) The amendments made by this Resolution come into force on 29 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

40. REMITTANCE BASIS

Resolved,
	That provision may be made about the remittance basis of taxation.

41. DOUBLE TAXATION RELIEF

Resolved,
	That provision (including provision having retrospective effect) may be made about double taxation relief.

42. AVOIDANCE INVOLVING FINANCIAL ARRANGEMENTS

Resolved,
	That provision (including provision having retrospective effect) may be made about—
	(a) relief for interest on loans, and
	(b) manufactured interest.

43. SALE OF LESSOR COMPANIES ETC

Resolved,
	That provision (including provision having retrospective effect) may be made amending Schedule 10 to the Finance Act 2006.

44. LEASES OF PLANT OR MACHINERY

Resolved,
	That provision (including provision having retrospective effect) may be made about leases of plant or machinery (including films).

45. REAL ESTATE INVESTMENT TRUSTS

Resolved,
	That provision (including provision having retrospective effect) may be made amending Part 4 of the Finance Act 2006.

46. DEDUCTIONS FOR EMPLOYEE LIABILITIES

Resolved,
	That—
	(1) The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.
	(2) In section 346 (deduction for employee liabilities), after subsection (2) insert—
	"(2A) Nor is a deduction allowed for a payment which falls within paragraph A, B or C if the payment is made in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax."
	(3) After section 556 insert—
	 "556A Deductible payments made pursuant to tax avoidance arrangements
	No deduction may be made under section 555 if the deductible payment is made in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax."
	(4).The amendments made by this Resolution have effect in relation to payments made on or after 12 January 2009 (irrespective of when the arrangements are made).
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

47. EMPLOYMENT LOSS RELIEF

Resolved,
	That—
	(1) In section 128 of the Income Tax Act 2007 (employment loss relief against general income), after subsection (5) insert—
	"(5 A) No claim may be made in respect of the loss if and to the extent that it is made as a result of anything done in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax."
	(2) The amendment made by paragraph (1)—
	(a) has effect in relation to a loss made in the tax year 2009-10 or a subsequent tax year, and
	(b) has effect in relation to a loss made in the tax year 2008-09 if or to the extent that it is occasioned by an act or omission occurring on or after 12 January 2009.
	(3) Where a person has made a claim under section 128 of the Income Tax Act 2007 during the relevant period, no penalty is payable by the person on the ground that any return, statement or declaration made in connection with the claim contained an inaccuracy if it would not have done so but for the amendment made by paragraph (1).
	For this purpose "the relevant period" is the period—
	(a) beginning with 12 January 2009, and
	(b) ending with 1 April 2009.
	(4).Subsection (2) of section 59C of the Taxes Management Act 1970 (surcharge on unpaid tax) has effect in relation to tax which would not be payable but for the amendment made by paragraph (1) as if the reference in that paragraph to the due date were to the later of 1 April 2009 and the due date.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

48. LOSSES FROM CONTRACTS FOR LIFE INSURANCE ETC

Resolved,
	That provision (including provision having retrospective effect) may be made about losses under Chapter 9 of Part 4 of the Income Tax (Trading and Other Income) Act 2005.

49. INTANGIBLE FIXED ASSETS

Resolved,
	That provision may be made amending Part 8 of the Corporation Tax Act 2009.

50. TAXABLE BENEFITS IN RESPECT OF ACCOMMODATION

Resolved,
	That provision may be made about the calculation of the cost of providing living accommodation in cases involving lease premiums.

51. SPECIAL ANNUAL ALLOWANCE CHARGE IN RESPECT OF PENSIONS

Resolved,
	That provision may be made for and in connection with a special annual allowance charge in respect of pensions.

52. FINANCIAL ASSISTANCE SCHEME

Resolved,
	That provision may be made about the financial assistance scheme provided for by regulations under section 286 of the Pensions Act 2004.

53. FSCS INTERVENTION IN INSURANCE IN CONNECTION WITH PENSIONS

Resolved,
	That provision may be made about interventions under the Financial Services Compensation Scheme in relation to insurance in connection with registered pension schemes.

54. VALUE ADDED TAX (PLACE OF SUPPLY OF SERVICES)

Resolved,
	That provision may be made for determining, and otherwise in connection with, the place of supply of services for the purposes of value added tax.

55. VALUE ADDED TAX (REPAYMENTS TO THOSE IN BUSINESS IN OTHER STATES)

Resolved,
	That provision may be made amending section 39 of the Value Added Tax Act 1994.

56. STAMP DUTY LAND TAX (EXERCISE OF COLLECTIVE RIGHTS BY TENANTS OF FLATS)

Resolved,
	That—
	(1) Section 74 of the Finance Act 2003 (collective enfranchisement by leaseholders) is amended as follows.
	(2) For subsection (1) substitute—
	"(1) This section applies where a chargeable transaction is entered into by a person or persons nominated or appointed by qualifying tenants of flats contained in premises in exercise of—
	(a) a right under Part 1 of the Landlord and Tenant Act 1987 (right of first refusal), or
	(b) a right under Chapter 1 of Part 1 of the Leasehold Reform, Housing and Urban Development Act 1993 (right to collective enfranchisement)."
	(3) In subsection (2)—
	(a) omit "In that case,", and
	(b) for "flats in respect of which the right of collective enfranchisement is being exercised" substitute "qualifying flats contained in the premises".
	(4).For subsection (4) substitute—
	"(4) In this section—
	"flat" and "qualifying tenant" have the same meaning as in the Chapter or Part of the Act conferring the right being exercised;
	"qualifying flat" means a flat that is held by a qualifying tenant who is participating in the exercise of the right."
	(5) For the heading substitute "Exercise of collective rights by tenants of flats".
	(6) Accordingly, in section 55(5) of that Act (amount of tax chargeable), for "collective enfranchisement by leaseholders" substitute "exercise of collective rights by tenants of flats".
	(7) The amendments made by this Resolution have effect in relation to transactions with an effective date on or after 22 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

57. STAMP DUTY LAND TAX (RENT TO SHARED OWNERSHIP)

Resolved,
	That—
	(1) In Schedule 9 to the Finance Act 2003 (stamp duty land tax: right to buy etc), insert at the end—
	 " Rent to shared ownership lease: charge to tax
	13 (1) The chargeable consideration for transactions forming part of a rent to shared ownership lease scheme is determined in accordance with this paragraph.
	(2) A 2rent to shared ownership lease scheme" means a scheme or arrangement under which a qualifying body—
	(a) grants an assured shorthold tenancy of a dwelling to a person ("the tenant") or persons ("the tenants"), and
	(b) subsequently grants a shared ownership lease of the dwelling or another dwelling to the tenant or one or more of the tenants.
	(3) The following transactions are to be treated as if they were not linked to each other—
	(a) the grant of the assured shorthold tenancy,
	(b) the grant of the shared ownership lease, and
	(c) any other land transaction between the qualifying body and the tenant, or any of the tenants, entered into as part of the scheme.
	(4) For the purpose of determining the effective date of the grant of the shared ownership lease, the possession of the dwelling by the tenant or tenants pursuant to the assured shorthold tenancy is to be disregarded.
	(5) In this paragraph—
	"assured shorthold tenancy" has the same meaning as in Part 1 of the Housing Act 1988;
	"qualifying body" has the same meaning as in paragraph 5;
	"shared ownership lease" has the same meaning as in paragraph 4A.
	 Rent to shared ownership trust: charge to tax
	14 (1) The chargeable consideration for transactions forming part of a rent to shared ownership trust scheme is determined in accordance with this paragraph.
	(2) A "rent to shared ownership trust scheme" means a scheme or arrangement under which—
	(a) a qualifying body grants an assured shorthold tenancy of a dwelling to a person ("the tenant") or persons ("the tenants"), and
	(b) the tenant, or one or more of the tenants, subsequently becomes the purchaser under a shared ownership trust of the dwelling, or another dwelling, under which the qualifying body is the social landlord.
	(3) The following transactions are to be treated as if they were not linked to each other—
	(a) the grant of the assured shorthold tenancy,
	(b) the declaration of the shared ownership trust, and
	(c) any other land transaction between the qualifying body and the tenant, or any of the tenants, entered into as part of the scheme.
	(4) For the purpose of determining the effective date of the declaration of the shared ownership trust, the possession of the dwelling by the tenant or tenants pursuant to the assured shorthold tenancy is to be disregarded.
	(5) In this paragraph—
	"assured shorthold tenancy" has the same meaning as in Part 1 of the Housing Act 1988;
	"qualifying body" has the same meaning as in paragraph 5;
	"social landlord" and "purchaser", in relation to a shared ownership trust, have the same meaning as in paragraph 7."
	(2) The amendment made by this Resolution has effect in relation to cases in which the effective date of the grant of the shared ownership lease or the declaration of the shared ownership trust is on or after 22 April 2009.
	(3) Paragraphs 13(4) and 14(4) of Schedule 9 to the Finance Act 2003 (inserted by this Resolution) have effect for the purposes of paragraph (2).
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

58. RING FENCE TRADES

Resolved,
	That provision may be made about the taxation of ring fence trades.

59. PETROLEUM REVENUE TAX

Resolved,
	That provision may be made about petroleum revenue tax.

60. RECOVERY OF OVERPAID TAX

Resolved,
	That provision may be made for and in connection with the recovery of overpaid tax.

61. GAMING PARTICIPATION FEES

Resolved,
	That—
	(1) Group 4 of Schedule 9 to the Value Added Tax Act 1994 (exemptions: betting, gaming and lotteries) is amended as follows.
	(2) In Note (1), omit paragraph (b) (granting of right to play game of chance not exempted unless within Note (5)).
	(3) Omit Notes (5) to (11).
	(4) The Value Added Tax (Betting, Gaming and Lotteries) Order 2007 (S.I. 2007/ 2163)is revoked.
	(5) Omit—
	(a) in the Betting and Gaming Duties Act 1981, sections 19(3)(b) and 26E(2), and
	(b) in the Finance Act 1997, section 1 l(9)(a).
	(6) The amendments made by this Resolution come into force on 27 April 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

62. GAMING DUTY

Resolved,
	That—
	(1) The Finance Act 1997 is amended as follows.
	(2) Section 10 (gaming duty) is amended as follows.
	(3) For subsection (2) substitute—
	"(2) Subject as follows, this section applies to—
	(a) casino games, and
	(b) equal chance gaming."
	(4) In subsection (3)(e), after "Article" insert "77,".
	(5) After subsection (3A) insert—
	"(3AA) This section does not apply to the playing of a game in respect of which bingo duty or lottery duty is chargeable or would be chargeable but for an express exception."
	(6) In subsection (3C)(a), after "in" insert "organising or".
	(7) For subsection (4) substitute—
	"(4) This section does not apply—
	(a) in Great Britain, to the playing of a game where the provision of facilities for its playing falls within section 269 of the Gambling Act 2005 (equal chance gaming at members' or commercial clubs and miners' welfare institutes), or
	(b) in Northern Ireland, to the playing of a game to which Article 128 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 (certain clubs) applies."
	(8) In subsection (5), for "add to the games mentioned in subsection (2) above" substitute "provide that any specified game is or is not to be a casino game or equal chance gaming for the purposes of this section".
	(9) In subsection (6), for "this section, or in an order under subsection (5) above," substitute "an order under subsection (5) above".
	(10) Section 14 (subordinate legislation) is amended as follows.
	(11) In subsection (2), for "or 11(11)" substitute "providing that any game is to be a casino game or equal chance gaming or any order under section 11(11)".
	(12) Insert at the end—
	"(4) A statutory instrument containing an order under section 10(5) that does not provide for any game to be a casino game or equal chance gaming subject to annulment in pursuance of a resolution of the House of Commons."
	(13) Section 15(3) (interpretation) is amended as follows.
	(14) After the definition of "accounting period" insert—
	""casino games" means games of chance which are not equal chance gaming (but subject to any order under section 10(5));".
	(15).After the definition of "dutiable gaming" insert—
	""equal chance gaming"—
	(a) in Great Britain, means gaming which does not involve playing or staking against a bank (however described, and whether or not controlled or administered by a player) and in which the chances are equally favourable to all participants, and
	(b) in Northern Ireland, means gaming in respect of which none of the conditions specified in Article 55 of the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985 is fulfilled,
	(but subject to any order under section 10(5));.
	(16) In consequence of the preceding provisions, omit—
	(a) in the Finance Act 2002, section 11,
	(b) in the Finance Act 2007, in Schedule 25, paragraph 17(4).
	(17) The amendments made by this Resolution are to be treated as having come into force on 27 April 2009.
	(18) But those amendments do not give rise to a duty under paragraph 6(3)(a) of Schedule 1 to the Finance Act 1997 (requirement to notify premises) before 25 May 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

63. REMOTE BINGO

Resolved,
	That—
	(1) The Betting and Gaming Duties Act 1981 is amended as follows.
	(2) In section 17 (bingo duty), after subsection (2) insert—
	"(2A) Bingo duty is not charged on the playing of bingo which is not licensed bingo if remote gaming duty is charged on the provision of facilities for playing it."
	(3) In section 26H (remote gaming duty: exemptions), after subsection (2) insert—
	"(2A) Subsection (2) does not prevent remote gaming duty being charged in respect of the provision of facilities for the playing of bingo which is not licensed bingo (as to the meaning of which terms see section 20C)."
	(4) The amendments made by this Resolution have effect in relation to games of bingo that begin to be played on or after I July 2009.
	And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

64. CLIMATE CHANGE LEVY (REDUCED-RATE SUPPLIES)

Resolved,
	That provision may be made about reduced-rate supplies for the purposes of climate change levy.

65. ALTERNATIVE FINANCE INVESTMENT BONDS

Resolved,
	That provision may be made in connection with alternative finance investment bonds.

66. TRANSFERS OF BUSINESS ETC BY MUTUAL SOCIETIES

Resolved,
	That provision may be made about the tax consequences of building societies, friendly societies and industrial and provident societies transferring business, merging or demutualising.

67. NATIONAL SAVINGS (SURPLUS FUNDS)

Resolved,
	That provision may be made for the payment into the Consolidated Fund of the surplus funds held by the National Debt Commissioners by virtue of section 17 of the National Savings Bank Act 1971.

68. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES)

Resolved,
	That it is expedient to authorise any incidental or consequential charges to any duty i or tax (including charges having retrospective effect) that may arise from provisions designed in general to afford relief from taxation.

pROCEDURE (fUTURE tAXATION)

Resolved,
	That, notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—
	(a) provision about rates and personal allowances for the purposes of income tax,
	(b) provision for corporation tax to be charged for the financial year 2010,
	(c) provision relating to the rates of vehicle excise duty from April 2010,
	(d) provision about the standard rate of landfill tax,
	(e).provision about taxable benefits in respect of cars, and
	(f).provision for and in connection with the recovery of overpaid tax.
	 Ordered,
	That a Bill be brought in upon the foregoing Resolutions;
	That the Chairman of Ways and Means, the Prime Minister, Mr. Chancellor of the Exchequer, Secretary Hilary Benn, Secretary Hazel Blears, Secretary Edward Miliband, Secretary James Purnell, Mr. Secretary Denham, Yvette Cooper, Mr. Stephen Timms, Angela Eagle and Ian Pearson introduce the Bill.

Finance Bill

Presentation and First Reading
	Mr. Stephen Timms accordingly presented a Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.
	 Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 90).

Business without Debate
	 — 
	Delegated Legislation

Motion made, and Question put forthwith (Order, 23 April, and Standing Order No. 118(6)),

Financial Assistance to Industry

That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, in respect of the Trade Credit Insurance Top-up Scheme, sums exceeding £10 million and up to a cumulative total of £5 billion to credit insurance businesses for the assistance of credit insurance policyholders. —(Helen Goodman.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),

Housing

That the draft Housing (Replacement of Terminated Tenancies) (Successor Landlords) (England) Order 2009, which was laid before this House on 19 March, be approved. —(Helen Goodman.)
	 Question agreed to.
	 Motion made, and Question put forthwith (Standing Order No. 118(6)),

Freedom of Information

That the draft Freedom of Information (Time for Compliance with Request) Regulations 2009, which were laid before this House on 26 March, be approved. —(Helen Goodman.)
	 Question agreed to.

EUROPEAN UNION DOCUMENTS

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Eastern Partnership

That this House takes note of European Union Documents Nos. 16940/08 and 16941/08, Commission Communication on Eastern Partnership and the accompanying Staff Working Document; and endorses the Government's policy of support for an Eastern Partnership as set out in the Conclusions of the Brussels European Council of 20 March . —(Helen Goodman.)
	 Question agreed to.

MEMBERS' HOME ADDRESSES

Motion made, and Question proposed, That this House do now adjourn. —(Helen Goodman.)

Julian Lewis: I am delighted to have secured this Adjournment debate, and I am touched by the fact that so many colleagues have stayed behind to listen to it at this extremely late hour.
	On 12 March a letter arrived in my party leader's office, complaining about my registering anonymously rather than publishing my address on the New Forest, East electoral roll. That is a basic security precaution, taken because of the work that I did before—and to some extent after—becoming an MP against political extremists at home and abroad. The letter demanded to know:
	"Who are these political extremists and who has sanctioned such involvement of a sitting MP?"
	It ended with the following pretentious declaration:
	"I view this matter extremely seriously and have therefore also written to Jonathan Evans the Director General of Security Services"—
	sic—
	"(MI5), Sir John Scarlett Chief of the Secret Intelligence Service (MI6) and Mr. Alex Marshall the Chief Constable of Hampshire, in an effort to throw some light on this situation."
	Nonsense of this sort can safely be ignored when it comes from the cranks with whom we occasionally have to deal. In this case, however, the author is a Liberal Democrat prospective parliamentary candidate, a 63-year-old retired military policeman who aims to oppose me at the next general election. His name is Terry Scriven, and his previous attempt to compromise my home address was drawn to the House's attention on 22 July last year. Since then, his campaign to blacken my name has intensified, most recently with the connivance of the  News of the World. It has therefore become necessary to return to this subject.
	I realise that the Deputy Leader of the House will not be able to address my situation in detail, and he knows that I can give him only a little time in which to reply, but I trust that he will confirm that not just the press but even political opponents have a duty to show some restraint where the personal security of parliamentarians is at stake. What has happened to me illustrates the mischief that malicious adversaries can make.
	In setting their prospective candidate's antics on the record, I mean no disrespect towards Liberals in my constituency in general. I have worked with Liberal Democrats to save community hospitals, and even now I am working with their group leader on the district council on an issue on which we agree. Several of them have told me privately of their dismay at Terry Scriven's tactics.
	I have previously fought three general elections in the New Forest without experiencing anything comparable to the events of the past few months. In 1997, when my seat had just been formed, the Liberal Democrat candidate was a New Forest district councillor, George Dawson. He fought a clean campaign. In 2001, my Liberal Democrat opponent was a county councillor called Brian Dash. I had worked with him on a cross-party basis to oppose the construction of a container port on sensitive land at Dibden bay. Before the 2001 election, I spoke to Mr. Dash about my constituency home. I told him my address and explained that if he looked it up on the electoral roll, he would find that as a basic security precaution, I was registered under a nom de plume. I added that that was by arrangement with the electoral registration officer at the district council, and I invited him to visit my home so that he could satisfy himself that it was genuine. He assured me that no such visit was necessary, that he fully appreciated why I had made the special registration arrangements and that they would never be an issue between us in an election campaign.
	Brian Dash kept his word, not only in the 2001 campaign but in the 2005 campaign, when he stood against me for a second time. By then, my seat had become a target for the Liberal Democrats and that campaign was not clean. Tacticalvoter.net, a left-wing group, infiltrated the local Labour party and installed Stephen Roberts as the Labour candidate. He worked hand in glove with the Liberal Democrats to try to oust me. Yet, despite the bitterness of that battle, the Liberal candidate, Brian Dash, kept his promise not to make an issue of the steps that I had taken to protect my home address.
	Following my improved majority in 2005—which may have had something to do with Tacticalvoter.net—and a boundary change helpful to the Conservatives, I learned that the Liberal Democrats would not be targeting my seat next time. That is apparently why they allowed Terry Scriven to become their candidate, despite the fact that he lives miles away from New Forest, East, on the far side of New Forest, West, and has given no indication of moving into the constituency that he says he wishes to serve. Since becoming a prospective parliamentary candidate in 2007, Mr. Scriven's impact on my constituency has been vanishingly small. Knowing that he cannot defeat me politically, he has gambled everything on trying to smear me personally.
	When I worked as a political researcher in the 1980s and early 1990s, I spent a lot of time ferreting out facts about left-wing political opponents. For example, I am holding a 250-page directory of Labour Members of Parliament and left-wing causes, which was published in the run-up to the 1992 general election. Yet nowhere in that book or in any of my other political research work will hon. Members find cases of my using personal rather than political information against any of the people featured. Indeed, until I encountered Mr. Scriven, I had never felt it necessary to consider personal misbehaviour by a political opponent.
	Last year, I began my campaign to neutralise the extraordinary decision of three High Court judges that MPs' home addresses should be revealed in response to freedom of information requests. In part, the judges based their ruling on the fact that all general election candidates had been required since the late 19th century to disclose a home address on nomination and ballot papers. We changed the law on MPs' addresses by statutory instrument in July 2008 and we are in the process of doing the same on candidates' addresses after the free vote on 2 March 2009. Significantly, the date of that vote was only 24 hours later than the smear story against me in the  News of the World—I do not think that that was a coincidence.
	I began the campaign to protect MPs' home addresses by making a speech on 22 May 2008, in the debate on the Adjournment, and I openly referred to my practice of registering under a nom de plume by arrangement with the electoral registration officer. That gave Terry Scriven his first opportunity. As I now know, on 25 June 2008, he e-mailed the chief executive of New Forest district council, Mr. Dave Yates, who is in overall charge of electoral registration, as follows:
	"As you are aware Julian Lewis MP, I am led to believe, lives at"—
	he then gave my constituency home address—
	"and is registered on the Electoral Role"—
	typically spelt like that—
	"under a false name (I am able to provide the name if helpful). Are you able to confirm that this is the case? Would you also state under which regulation this procedure is authorised and by whom? I am not trying to create any waves here just to understand facts so that I do not ask silly questions in public. I must also add at this moment I have no intention of making information I have in my position"—
	I presume that he meant "possession"—
	"if correct, public".
	Mr. Yates replied that I had indeed registered in that way, by arrangement with the previous electoral registration officer, for reasons of personal safety. That had happened for a number of years but, Mr. Yates told Scriven, now that a new system of "Anonymous Registration" existed, I would be asked to use that instead of the nom de plume method in future.
	On 11 July, Mr. Scriven replied to the chief executive in the following apparently generous terms:
	"Your email is very clear. I fully understand the reasons for Julian wishing to keep his private address confidential despite it appearing on the election forms and the agreement that was clearly entered into. I am sure both Julian and I understand the need for security."
	That was the first but by no means the last time that Mr. Scriven professed to support me in keeping MPs' home addresses confidential. However, his private conduct has been utterly incompatible with his public position.
	As I told the House last July, New Forest district council chief executive Dave Yates was contacted by a Sunday newspaper just seven days after Scriven's supposedly supportive e-mail. The exchange of e-mails between Mr. Scriven and Mr. Yates had been leaked to a journalist called Ben Leapman—the very reporter leading the campaign for MPs' home addresses to be published to all and sundry. The leak could have come only from Terry Scriven, if we exclude impropriety by the staff of New Forest district council, which I am sure we can.
	I have repeatedly asked Mr. Scriven to explain why he approached Ben Leapman to investigate a supposed irregularity in my electoral registration arrangements, when he had indicated to Mr. Yates that he fully accepted the need for those arrangements. Time and again, Mr. Scriven has refused to answer that question. I have also asked him why he chose Ben Leapman as the journalist to approach, given that reporter's hostility towards me for thwarting his efforts to force MPs' addresses to be published. If Mr. Scriven is sincere in his proclaimed support for my campaign to protect MPs' home addresses, Mr. Leapman is the last journalist in Britain whom he should have contacted. That question, too, Mr. Scriven refuses to answer.
	In the end,  The Sunday Telegraph decided not to run Mr. Leapman's story, which simply tried to catch me out for having used a nom de plume for one year too long, rather than the new procedure of anonymous registration that had succeeded it. But Scriven was undaunted. After trying to smear me in  The  Sunday  Telegraph, he immediately wrote to the chief constable of Hampshire, demanding that I be criminally investigated for having registered in that way.

Richard Bacon: That's Liberal Democrats for you.

Julian Lewis: I agree.
	That despicable manoeuvre was carried out in full knowledge of the fact that my use of the nom de plume had been explicitly approved by the electoral registration officer. In any case, I had always accurately stated my real name on the voter registration form when signing it, while clearly indicating that the different name on the register was an agreed nom de plume.
	Terry Scriven did not even have the decency to inform me of what he had done, but at once telephoned a local reporter in order to use the press to twist the knife that he had aimed at my back. Fortunately it missed its target, as the following report in the  Lymington Times, dated 16 August 2008, makes clear. The headline is "Chief Constable Scorns Call for MP Investigation" and the story reads as follows:
	"A political rival who reported a New Forest MP to the Police for the way he registered to vote has been blasted by the Chief Constable for wasting officers' time. Liberal Democrat Terry Scriven—who will contest the New Forest East seat at the next General Election—had complained about a discrepancy in Conservative MP Julian Lewis's habit of using a false name on the electoral roll, to keep secret where he lives for security reasons. But Mr. Scriven's action was scorned by Hampshire's top policeman, Paul Kernaghan, who rejected his request for an investigation and said Dr. Lewis had acted 'in good faith' on the advice of the District Council officer in charge of electoral registration. Mr. Kernaghan wrote to the MP: 'I sincerely hope that [Mr. Scriven] will decide to move on, as it is my personal view that this 'complaint' does not enhance our collective respect for democracy and the electoral process.'"
	[Hon. Members: "Hear, hear."] I am glad that colleagues agree. Mr. Kernaghan continued:
	"The employment of scarce police resources to investigate whether or not a technical breach of the legislation had taken place would be a total waste of effort and not in the public interest".
	After that outrageous episode, I realised that I was dealing with an extremely unscrupulous individual. Some of the publicity surrounding Terry Scriven resulted in my being contacted by people who had previously suffered at his hands. Three were from the military police, but I cannot report what they said in language permissible in this Chamber. It boiled down to the fact that Terry Scriven's conduct had shown him to be a devious and two-faced bully who operates in the dark and never owns up to what he has done. My experience has confirmed that assessment in every respect.He blatantly refuses to answer any questions put to him about his own conduct, his sole response being to accuse me of trying to "intimidate" him by posing such questions.
	That is irony indeed, coming from a man who has to date put in no fewer than 16 freedom of information requests to the House of Commons, 12 of which directly relate to me and my staff. He has refused to say, inter alia, why he used the Freedom of Information Act 2000 to request—unsuccessfully—the address of my flat in London, given his repeated statements of support for my campaign against the disclosure of MPs' home addresses. He has also refused to say why, when he tried to have me investigated by the police, he told the  Lymington Times reporter that he had done so but did not tell me, or why he complained, also unsuccessfully, to the Parliamentary Commissioner for Standards about my parliamentary caseworker, but did not tell her about this. He would not say why, when he complained to Sir Neil Thorne about the frequency of my participation in the armed forces parliamentary scheme—the AFPS—this was yet again done behind my back.
	Sir Neil is admired in all parts of the House for setting up and running the AFPS. On 16 March this year, he wrote to tell me how much disruption Scriven's vendetta was causing. Sir Neil states:
	"Since my last correspondence with him, it has come to my notice that Mr. Scriven has been in touch with at least six different officials about the Scheme...although I am not directly affected, those who are being asked to respond to these numerous questions about the AFPS are being deprived of time which they ought to be able to spend on operational matters. As you"—
	that is me, Julian Lewis—
	"seemed to be the target of Mr Scriven's original questions, I wonder if you can throw any light on what is the basis for this barrage of further enquiries about the Scheme? Until now, the Scheme has enjoyed unparalleled cross-party support and I am frankly concerned that someone seems intent on trying to disrupt or in some way undermine it in pursuit of some personal political objective."
	The only advice I could give Sir Neil was that this manic and disruptive activity was part of a consistent pattern of behaviour that I have pieced together with the help of those who have encountered Terry Scriven in the past.

John Bercow: He's a nutter.

Julian Lewis: Well, it's not just that he's a nutter.
	In May 1999, Scriven was elected unopposed as one of half a dozen members of the parish council at Hyde in New Forest, West, the constituency in which he lives. Although he was elected for a four-year term, he lasted just six months as a parish councillor. During that time, he attended only four of the first nine meetings and resigned at the 10th—which was his fifth—after constant disagreements with his colleagues.The same happened when he was "elected", again unopposed, to Ringwood town council in 2006 and put on the planning committee. He attended his first council meeting on 26 July, but resigned from the planning committee on 25 October, only three months later, after a blazing row with the other members. In April 2007, the mayor of Ringwood announced, with some relief, that Scriven would be stepping down from the council completely.

Christopher Fraser: They will give him a peerage.

Julian Lewis: No, I do not think they will give him a peerage. His career as a town councillor in his local area in New Forest, West had lasted less than nine months from beginning to end. This fiasco followed hard on the heels of an even shorter dalliance as a trustee of an educational charity—the Vocational Training Charitable Trust—to whose board he had been formally elected at an annual general meeting on 4 October 2005. Such was his disruptive behaviour that, after attending only two meetings, he was twice asked to resign by the other trustees. He did so on 6 December, only two months later. [Hon. Members: "More! More!"] I must ask colleagues to restrain themselves, as I need to get through my speech in the time allowed.
	All this shows a consistent pattern of deviousness and disruption. Normally, one would simply write Scriven off as a malevolent failure and put one's faith in the good sense of the voters when the election is called. However, this brings me back to where I began, for Terry Scriven has finally had a success. He has managed to get the  News of the World to publish a story falsely accusing me of hardly ever "visiting", as it puts it, the home in my constituency where I have lived continuously for the past 11 years when I am not at Westminster. My genuine neighbours state, correctly, that I am constantly using my home, yet unnamed people, described as "neighbours" and "locals", supposedly told the newspaper that I am "HARDLY THERE"—the quote is all in capitals—enabling it to denounce me for claiming my parliamentary allowance on my London flat, which I am perfectly entitled to do. The newspaper's story contained one factual item: the date on which I changed my main home designation from my flat in London to my house in my constituency. That had never been published before, but it had been disclosed by the House of Commons to Terry Scriven and to nobody else on 11 July 2008, at the same time as his freedom of information request for my home address in London was rightly rejected.
	As Mr. Scriven never responds to any questions that I put to him, other than to accuse me of trying to "intimidate" him by asking them, I had my solicitor write to him on 12 March pointing out that it appeared that
	"the internal evidence in this false"—
	 News of the World—
	"story demonstrates that you were the initiator of it".
	The letter gave him
	"the opportunity (i) to deny any role in the concoction of the News of the World report and (ii) to explain how else the newspaper could have obtained knowledge of the change of designation in June 2004, which was disclosed by the House of Commons only to you".
	It concluded as follows:
	"Our client intends presently to mention these matters publicly"—
	I am doing that tonight—
	"and is offering you this chance to put forward your explanation of events, before he proceeds...Our client's questions are, of course, not intended in any way to intimidate you but are designed to provide you with a full opportunity to respond and to correct any alleged inaccuracies of fact before he comments publicly about your behaviour....If we do not hear from you by 25 March 2009 our client will proceed as indicated, and people will be able to draw their own conclusions from your continued and persistent silence".
	Mr. Scriven replied on 20 March stating that he had
	"previously informed Dr Lewis on a number of occasions, in writing, that I find his actions intimidating...I will place this latest letter with a growing pile of other letters, emails and a message left on my answer phone which I have received from Dr Lewis over a period of almost nine months".
	What Scriven did not do in this letter was to deny for one moment that he had indeed been the initiator of the  News of the World smear. As my solicitor has now informed him, the only reason that a "pile of other letters" exists has been his own behaviour towards me and my staff, and his constant evasion of all questions put to him about it.
	I have little doubt that at some point during the next general election campaign Mr. Scriven will seek to distribute, perhaps unattributably, and perhaps with its date removed in order to make it look current, large numbers of copies of the  News of the World smear story against me—that is, assuming that decent Liberal Democrats who, unlike Terry Scriven, actually live in the New Forest, East constituency, have not finally realised that they made a disastrous mistake in selecting as their candidate someone whose behaviour makes him unfit for any elected position in public life.
	My only defence against the covert tactics of this man is to bring them out into the open in the hope of inoculating the community against their intended effects. I have given him numerous opportunities to explain and justify his conduct, and his only response has been to claim to feel intimidated by me—that is the classic refrain of the bully when an intended victim actually stands up to him. What can we expect next? Will it be a press smear against Sir Neil Thorne or the armed forces parliamentary scheme, or just another smear against me, as a shadow Defence Minister, for daring to spend so much time with the military? Can we expect a demand for the abolition of parliamentary privilege, so that hon. Members cannot rebut scurrilous critics such as Mr. Scriven? Actually—I am not making this up—he has tried that one already. Perhaps we can expect a police raid on my home, because Terry Scriven feels "intimidated" by my asking him to confirm or deny his role in the  News of the World smear.
	I began by discussing Scriven's preposterous letter to my party leader, which, typically, was labelled "In Confidence", so that I should not see his latest attempt to disparage me. It revealed that Terry Scriven expects the director general of MI5 and the chief of the Secret Intelligence Service to tell him if I have ever been involved with either organisation. Perhaps he does not realise that, just as people who work with or for such bodies have a lifelong obligation of confidentiality towards them, the reverse is also true. I can only apologise to them, to the chief constable of Hampshire, to Sir Neil Thorne, and to everyone else whose valuable time is being wasted by intrusive and inappropriate correspondence from this person, who likes to describe himself as the "prospective Member of Parliament" for my constituency. [Hon. Members: "Never!"] I am glad that my hon. Friends say, "Never." This is a calculated effort to blacken my reputation in the eyes of my constituents. Thanks to the internet I have been able to respond quickly to the smears of the  News of the World and to post the full documentation about Terry Scriven's antics in a special section of my website so people can read them and make up their own minds. Despite the co-operation of a certain sort of journalist, I do not think that Mr. Scriven will succeed in the end, but as he has to some extent poisoned the politics of New Forest, East, I thank the House for this opportunity to expose his behaviour and to set it on the record—[Hon. Members: "Hear, hear!"]

Chris Bryant: This is far too much excitement for an Adjournment debate. There is obviously also too much excitement in politics in the constituency of the hon. Member for New Forest, East (Dr. Lewis), although he rather lost me when he was going on about the mayor of Ringwood, which sounds like a veterinary equine condition.
	I pay tribute to the hon. Gentleman, who is not only one of the most fastidious Members, but one of the most respectful, and indeed the most fastidiously respectful of hon. Members. I have never found him intimidating, not even when he has been trying to be intimidating, so I am delighted that he has managed to see off the gentleman in his constituency. I am also fascinated by the idea of having a nom de plume. It sounds like having a nom de guerre, and again is far too exciting. I have also never known anyone be quite so public about being private about their address.
	I can be dispassionate on this issue as mine is the only constituency in the country in which both the Conservatives and the Liberal Democrats have lost their deposits on the same occasion. I, too, increased my majority at the last election, and I am sure that that had nothing to do with anything on the internet— [ Laughter. ] It pays to advertise.
	We can agree on many issues in this debate. First, the armed forces parliamentary scheme should not be taken lightly. It has provided an invaluable service for many hon. Members, including me, who would otherwise know very little of the armed forces, and we should thank Sir Neil Thorne. Secondly, the security of all hon. Members and their families and staff—we should not forget them—is a very serious matter. There have been very serious incidents in the past that the Liberal Democrats and other parties have had to face. That is a matter for the whole House.
	In my own case, I had a stalker turn up outside my front door in London who had to be removed by the police. He rang me up and asked, "Is that Chris Bryant?" I said, "Yes." He said, "I'm Malcolm, I'm outside." I told him to go away. He said, "I'm very submissive." I used an expletive and he said, "I'm not that submissive." The police took him away. On a second occasion, someone was sent to prison for harassment, not because they were particularly aggressive towards me, but because they were making it impossible for me to do my job at my surgery.
	All hon. Members will be aware of cases in their constituencies where they have had to deal with people who have mental health problems or who are fixated on them. It is incumbent on the whole political community to work together to ensure that such situations do not infect the body politic.
	The House took a clear decision, on a free vote, to change the law in relation to candidates and whether they had to put their full address on the ballot. It is permissive, and if people want to put their address on they can do so. There were 235 votes in favour of changing the law and only 176 against. We also introduced a statutory instrument under the freedom of information legislation to ensure that Members' residential addresses could be kept secure for the obvious reasons that the hon. Gentleman has elucidated.
	I think we can all agree that police time should not be wasted on nonsense such as this. We can also agree that a free press is absolutely vital, but with a free press must surely come the duty to be accurate, to tell the whole story and to give the opportunity for a right of reply.
	Finally, and most importantly of all, politics is an honourable profession and it should be entered into honestly and with magnanimity. When we show magnanimity across the House, we earn the respect of all voters.
	 Question put and agreed to.
	 House adjourned.